Total cash inflows $325,000 Measure the Payback Period for this in

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A business is considering investing in specialized equipment costing
$280,000. The equipment has a useful life of 5 years and a residual
value of $20,000. Depreciation is calculated using the straight-line
method. The expected net cash inflows from the investment are:
Year 1
Year 2
Year 3
Year 4
Year 5
Total cash inflows $325,000
Measure the Payback Period for this investment.
$60,000
$90,000
$110,000
$40,000
$25,000
Transcribed Image Text:A business is considering investing in specialized equipment costing $280,000. The equipment has a useful life of 5 years and a residual value of $20,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are: Year 1 Year 2 Year 3 Year 4 Year 5 Total cash inflows $325,000 Measure the Payback Period for this investment. $60,000 $90,000 $110,000 $40,000 $25,000
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