(Ignore income taxes in this problem. )The management of Rusell Corporation is considering a project that would require an investment of $282,000 and would last for 6 years.The annual net operating income from the project would be $107,000,which includes depreciation of $43,000.The scrap value of the project's assets at the end of the project would be $24,000.The payback period of the project is closest to:

Question

Quizplus · Accepted Answer

The payback period is the amount of time it takes for the project to generate enough cash flow to cover the initial investment. In this case, the initial investment is $282,000 and the annual net operating income is $107,000. So, the payback period is 282,000 / 107,000 = 2.6 years.

(Ignore Income Taxes in This Problem