Use the Information Below to Answer the Following Questions Depreciation Has Been Calculated on a Straightline Basis
Use the information below to answer the following questions.
Y3 Ltd is expanding its production of binoculars. The plant is expected to cost $750,000, have a life of 5 years, and a nil residual value. It will be ready for operation on 31 December 2017. The following statement of comprehensive income figures for the new binoculars are forecast: Depreciation has been calculated on a straightline basis. You should assume that all cash flows occur at the end of the year in which they arise. The company's cost of capital is 10%. Ignore taxation.
-Refer to the table above. The payback period is:
A) between years 2 and 3.
B) between years 4 and 5.
C) between years 3 and 4.
D) between years 1 and 2.
Correct Answer:
Verified
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