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The management of L Corporation is considering a project that would require an investment of $265,000 and would last for 6 years. The annual net operating income from the project would be $111,000, which includes depreciation of $30,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to (Ignore income taxes.): Multiple Choice 1.7 years 1.9 years 2.4 years 2.0 years

Sagot :

ayokenny2001

The payback period of the project is closest to 1.9 years

The formula to compute the payback period is shown below:

= Initial investment / Net cash flow

where,

Initial investment is $265,000

And, the net cash flow

= annual net operating income + depreciation expenses

= $111,000 + $30,000

= $141,000

Imputing the figure to the above formula  

= $265,000 / $141,000

= 1.9years

Hence, the payback period of the project is closest to 1.9 years

Learn more about cash flow here: https://brainly.com/question/13782330

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