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Arrendo,Inc Calculate the Payback Period for Investment B

question 80

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Arrendo,Inc.is evaluating two possible investments in depreciable plant assets.The company uses the straight-line method of depreciation.The following information is available:  Investment A  Investment B  Initial capital investment $107,000$159,000 Estimated useful life 10 years 10 years  Estimated residual value 0$26,000 Estimated annual net cash inflow for 10 years $28,000$46,000 Required rate of return 10%14%\begin{array} { | l | r | r | } \hline & \text { Investment A } & \text { Investment B } \\\hline \text { Initial capital investment } & \$ 107,000 & \$ 159,000 \\\hline \text { Estimated useful life } & 10 \text { years } & 10 \text { years } \\\hline \text { Estimated residual value } & 0 & \$ 26,000 \\\hline \text { Estimated annual net cash inflow for 10 years } & \$ 28,000 & \$ 46,000 \\\hline \text { Required rate of return } & 10 \% & 14 \% \\\hline\end{array} Calculate the payback period for Investment B.(Round your answer to two decimal places.)

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Definitions:

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Government-imposed limits on the prices that can be charged for goods and services in a market, to control inflation or ensure affordability.

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Actions or decisions taken primarily for political advantage, often to gain popularity or satisfy a particular group, despite potential long-term disadvantages.

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Rules or directives made and maintained by an authority to regulate behavior or enforce standards.

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