Question

(Ignore income taxes in this problem.) Avanca Fitness Center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 10 years with no salvage value at the end of the 10 years. Ataxia's internal rate of return on this equipment is 12%. Ataxia's discount rate is also 12%. The payback period on this equipment is closest to: Multiple Choice 10 years 5 years 5.65 years 4.26 years

Answer 1

Step-by-step explanation:

The payback period on this equipment is closest to value of PV factor of 12% for 10 years

Factor of the internal rate of return=
`((1-(1.12)^(-10)))/(0.12) = 5.65`

The payback period on this equipment is 5.65 years