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:___.a) 2.8 years.

b) 4.6 years.
c) 3.5 years.
d) 2.7 years.

Answer 1

the payback period of the project is 3.20 years

Step-by-step explanation:

The computation of the payback period of the project is shown below:

= Investment ÷ incremental cash inflows

= $343,000 ÷ $107,000

= 3.20 years

hence, the payback period of the project is 3.20 years

This is the answer but the same is not provided in the given options

Hence, the same should be considered