(Ignore income taxes in this problem.)Olinick Corporation is considering a project that would require an investment of $343,000 and would last for 8 years.The incremental annual revenues and expenses generated by the project during those 8 years would be as follows:
The scrap value of the project's assets at the end of the project would be $23,000.The cash inflows occur evenly throughout the year.The payback period of the project is closest to:

Question

(Ignore income taxes in this problem.)Olinick Corporation is considering a project that would require an investment of $343,000 and would last for 8 years.The incremental annual revenues and expenses generated by the project during those 8 years would be as follows:
 The scrap value of the project's assets at the end of the project would be $23,000.The cash inflows occur evenly throughout the year.The payback period of the project is closest to:

Quizplus · Accepted Answer

11ea7761_15b3_3322_81a5_5f0cfec6d042_TB2580_00 Payback period = Investment required ÷ Annual net cash inflow
= $343,000 ÷ $107,000 per year = 3.2 years

(Ignore Income Taxes in This Problem