Given the Following Information and Assuming Straight-Line Depreciation to Zero

question 256

Multiple Choice

Given the following information and assuming straight-line depreciation to zero, what is the payback period for this project? Initial investment = $500,000; life = five years; cost savings = $160,000 per year; salvage value = $30,000 in year 5; tax rate = 34%; discount rate = 13%.

• A) 2.5 years
• B) 3.6 years
• C) 3.9 years
• D) 4.4 years
• E) The payback period is greater than the project's life.

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