(Ignore income taxes in this problem.) Joetz Corporation has gathered the following data on a proposed investment project:
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
-The payback period for the investment is:

Question

(Ignore income taxes in this problem.) Joetz Corporation has gathered the following data on a proposed investment project:
  The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
-The payback period for the investment is:

Quizplus · Accepted Answer

Payback period = Investment required ÷ Annual net cash inflow
= $30,000 ÷ $6,000 per year = 5 years

(Ignore Income Taxes in This Problem