Sky High Company is considering the purchase of an investment of $250,000. Data related to the investment are as follows:
Cash flows (at the end of the next 4 years) $125,000
Salvage value of new investment $25,000
Proceeds from disposal of old investment $22,000
Investment in working capital $14,000
Tax Rate 21%
With a discount rate of 9%, what is the simple payback period of the investment.
A) 2.1 years.
B) 2.0 years.
C) 1.9 years.
D) 1.8 years.
Correct Answer:
Verified
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