Use the information below to answer the following question(s).
Latimer Corporation is considering two alternative investment proposals with the following data:

-Brackett Corporation is adding a new product line that will require an investment of $120,000. The product line is estimated to generate cash inflows of $25,000 the first year, $23,000 the second year, and $18,000 each year thereafter for ten more years. What is the payback period?

Question

Use the information below to answer the following question(s).
Latimer Corporation is considering two alternative investment proposals with the following data:
 
-Brackett Corporation is adding a new product line that will require an investment of $120,000. The product line is estimated to generate cash inflows of $25,000 the first year, $23,000 the second year, and $18,000 each year thereafter for ten more years. What is the payback period?

Quizplus · Accepted Answer

B) $25,000 + $23,000 + ($18,000 × 4) = $120,000; 6 years

Use the Information Below to Answer the Following Question(s)