Minor Company Is Going to Invest in a New Product

question 104

Multiple Choice

Minor Company is going to invest in a new product line.Minor estimates that the net cash flows from the new line will be $25,000 per year.The initial investment required to implement the new line will be $500,000.The company requires a rate of return of 8% and the new product line is expected to span a time period of 15 years.What is the payback period of the new product line?

• A)1.6 years
• B)12.5 years
• C)20 years
• D)25 years

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