A company is evaluating three possible investments. The following information is provided by the company: Project A Project B Project C Investment $200,000 $54,000 $200,000 Residual value 0 18,000 26,000 Net cash inflows: Year 1 58,000 34,000 82,000 Year 2 58,000 25,000 52,000 Year 3 58,000 21,000 62,000 Year 4 58,000 18,000 22,000 Year 5 58,000 0 0 What is the payback period for Project A? (Assume that the company uses the straight-line depreciation method. Round answer to two decimal places.) OA. 3.45 years OB. 2.45 years OC. 1.59 years OD. 5.00 years
A company is evaluating three possible investments. The following information is provided by the company: Project A Project B Project C Investment $200,000 $54,000 $200,000 Residual value 0 18,000 26,000 Net cash inflows: Year 1 58,000 34,000 82,000 Year 2 58,000 25,000 52,000 Year 3 58,000 21,000 62,000 Year 4 58,000 18,000 22,000 Year 5 58,000 0 0 What is the payback period for Project A? (Assume that the company uses the straight-line depreciation method. Round answer to two decimal places.) OA. 3.45 years OB. 2.45 years OC. 1.59 years OD. 5.00 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A company is evaluating three possible investments. The following information is provided by the company:
Project A Project B
Project C
Investment
$200,000
$54,000
$200,000
Residual value
0
18,000
26,000
Net cash inflows:
Year 1
58,000
34,000
82,000
Year 2
58,000
25,000
52,000
Year 3
58,000
21,000
62,000
Year 4
58,000
18,000
22,000
Year 5
58,000
0
0
What is the payback period for Project A? (Assume that the company uses the straight-line depreciation method. Round answer to two decimal places.)
OA. 3.45 years
OB. 2.45 years
OC. 1.59 years
OD. 5.00 years
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