(Ignore income taxes in this problem.)Jarvey Corporation is studying a project that would have a ten-year life and would require a $450,000 investment in equipment which has no salvage value.The project would provide net operating income each year as follows for the life of the project: The company's required rate of return is 12%.The payback period for this project is closest to:

Question

(Ignore income taxes in this problem.)Jarvey Corporation is studying a project that would have a ten-year life and would require a $450,000 investment in equipment which has no salvage value.The project would provide net operating income each year as follows for the life of the project:  The company's required rate of return is 12%.The payback period for this project is closest to:

Quizplus · Accepted Answer

11ea7998_5c36_8c70_911b_598e8f4c6690_TB2627_00_TB2627_00 Payback period = Investment required ÷ Annual net cash inflow
= $450,000 ÷ $150,000 per year = 3 years

(Ignore Income Taxes in This Problem