The Bonkers Corp Ignoring Income Taxes, What Is the Payback Period?
A) 3

question 87

Multiple Choice

The Bonkers Corp. is contemplating the purchase of a piece of equipment with the following cash flow data: $$\begin{array} {cccc} &&&\text { Incremental } \\\text { Year } & \text { Initial Cost } & \text { Contribution }&\text { Terminal Value }\\\hline0&\$ 84,000 \\1 & & \$ 30,000 & \\2 & &25,000 & \\3 & & 20,000 & \\4 & &15,000 &\$9,000\end{array}$$ Ignoring income taxes, what is the payback period?

• A) 3.00 years
• B) 3.33 years
• C) 3.60 years
• D) 3.50 years

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