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A company is considering a capital investment of $45,000 in new equipment which will improve production and increase cash flows by $15,000 per year for 6 years. The payback period is years.
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9 votes
9 votes
A company is considering a capital investment of $45,000 in new equipment which will improve production and increase cash flows by $15,000 per year for 6 years. The payback period is years.

User Digger
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1 Answer

20 votes
20 votes

Answer:

3 years

Step-by-step explanation:

Calculation to determine The payback period

Using this formula

Payback period=Capital investment/ Increase cash flows

Let plug in the formula

Payback period=$45,000/$15,000

Payback period=3 years

Therefore The payback period is 3 years

User James Wong
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3.1k points
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