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

question 198

Multiple Choice

Given the following project information and assuming straight-line depreciation to zero, what is the discounted payback period? 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) Two years
• B) Three years
• C) Four years
• D) Five years
• E) The discounted payback period is greater than the project's life.

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