(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that costs $480,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are:
-The payback period of this investment is closest to:

Question

(Ignore income taxes in this problem.) Gull Inc. is considering the acquisition of equipment that costs $480,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are: 
-The payback period of this investment is closest to:

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial investment by the annual cash inflow. If the cash inflows are consistent, the payback period can be directly calculated. Based on the given options, 3.1 years is the closest estimate.

(Ignore Income Taxes in This Problem