Question

Olinick Corporation is considering a project that would require an investment of $343,000 and would last for 8 years. The incremental cash inflows of the project per year at $107,000. The scrap value of the project's assets at the end of the project would be $23,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

Answer 1

3.2 years

Step-by-step explanation:

Calculation to determine what The payback period of the project is closest to:

Using this formula

Payback period = Investment required ÷ Annual net cash inflow

Let plug in the formula

Payback period= $343,000 ÷ $107,000 per year Payback period= 3.2 years

Therefore The payback period of the project is closest to:3.2 years