Kenny Company is considering the possibility of investing $1,500,000 in a special project.This venture will return $375,000 per year for 12 years in after tax cash flows.Depreciation on the project will be $187,500 per year using straight-line depreciation.The payback period for the project is:

Question

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial investment by the annual cash flow. Here, $1,500,000 / $375,000 = 4 years.

Kenny Company Is Considering the Possibility of Investing $1,500,000 in a Special