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8 years ago
A company is evaluating three possible investments. The following information is provided by the company:

   Project A   Project B   Project C
Investment   $240,000   $54,000   $240,000
Residual value   0   18,000   38,000
Net cash flows:         
Year 1   62,000   34,000   98,000
Year 2   62,000   25,000   68,000
Year 3   62,000   21,000   78,000
Year 4   62,000   18,000   38,000
Year 5   62,000   0   0

What is the payback period for Project A? (Assume that the company uses the straight-line depreciation method.) (Round your answer to two decimal places.)
A) 1.59 years
B) 3.87 years
C) 2.87 years
D) 5.00 years
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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