ABC Company is adding a new product line that will require an investment of $1,500,000. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. What is the payback period?

Question

Quizplus · Accepted Answer

C) Calculations: $1,500,000 - $300,000 - $250,000 = $950,000
$950,000/$200,000 = 4.75
4.75 + 2 = 6.75

ABC Company Is Adding a New Product Line That Will