(Ignore income taxes in this problem.) Oriental 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 would be:

Question

(Ignore income taxes in this problem.) Oriental 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 would be:

Quizplus · Accepted Answer

Payback period = Investment required ÷ Annual net cash inflow
= $200,000 ÷ $50,000 per year = 4 years

(Ignore Income Taxes in This Problem