The LMN Corporation is considering an investment that will cost $80,000 and have a useful life of 4 years. During the first 2 years, the net incremental after-tax cash flows are $25,000 per year and for the last two years they are $20,000 per year. What is the payback period for this investment?
The LMN Corporation is considering an investment that will cost $80,000 and have a useful life of 4 years. During the first 2 years, the net incremental after-tax cash flows are $25,000 per year and for the last two years they are $20,000 per year. What is the payback period for this investment?
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
Problem 1PS
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![The LMN Corporation is considering an
investment that will cost $80,000 and have a
useful life of 4 years. During the first 2 years,
the net incremental after-tax cash flows
are $25,000 per year and for the last two
years they are $20,000 per year. What is the
payback period for this investment?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F20e14fe4-3852-43ba-982d-61e2fc77d399%2F55aea86a-514c-4dc8-beeb-94f48d59200b%2Fmkh6rsq_processed.png&w=3840&q=75)
Transcribed Image Text:The LMN Corporation is considering an
investment that will cost $80,000 and have a
useful life of 4 years. During the first 2 years,
the net incremental after-tax cash flows
are $25,000 per year and for the last two
years they are $20,000 per year. What is the
payback period for this investment?
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