Brady corp. is considering the purchase of a piece of equipment that costs $20,000. projected net annual cash flows over the project's life are: year net annual cash flow 1 $ 3,000 2 8,000 3 15,000 4 9,000 the cash payback period is select one:

a. 2.29 years.

b. 2.60 years.

c. 2.40 years.

d. 2.31 years.

Question

Business

Darien

27 February, 00:56

Brady corp. is considering the purchase of a piece of equipment that costs $20,000. projected net annual cash flows over the project's life are: year net annual cash flow 1 $ 3,000 2 8,000 3 15,000 4 9,000 the cash payback period is select one:

a. 2.29 years.

b. 2.60 years.

c. 2.40 years.

d. 2.31 years.

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Answers (1)

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Everett · Answer 1

B

Explanation:

Payback period is the total time it takes an organization to recover the initial capital incurred in acquiring an asset.

It is expressed in years and fraction of years.

Initial investment 20,000

Year 1 3000 17000

Year 2 8000 9000

Year 3 15,000

9000/15000 = 0.6 years

The payback period = 2.6 years