Redtail Hawk Company is evaluating two possible investments in depreciable plant assets. The company uses the straight−line method of depreciation. The following information is​ available:     Investment A Investment B Initial capital investment ​$17,500 ​$455,000 Estimated useful life 8 years 8 years Estimated residual value ​$8,000 ​$15,000 Estimated annual net cash inflow ​$7,000 ​$70,000 Required rate of return ​11% ​12%   How long is the payback period for Investment​ A?

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
Section: Chapter Questions
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Redtail Hawk Company is evaluating two possible investments in depreciable plant assets. The company uses the
straight−line
method of depreciation. The following information is​ available:
 
 
Investment A
Investment B
Initial capital investment
​$17,500
​$455,000
Estimated useful life
8 years
8 years
Estimated residual value
​$8,000
​$15,000
Estimated annual net cash inflow
​$7,000
​$70,000
Required rate of return
​11%
​12%
 
How long is the payback period for Investment​ A?
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