Use the Following Information to Answer the Next Question(s)

question 4

Multiple Choice

Use the following information to answer the next question(s) .
Sunny Flowers is considering the purchase of a small business that costs $500,000. Sunny plans to sell stock valued at $250,000. The stock would pay dividends of $20,000 per year. Sunny would borrow the remaining $250,000 from a local bank at 12 percent interest.
The business is expected to generate annual cash inflows of $80,000. Duane plans to operate the business for 15 years and then turn it over to his son.
-Payback for the project is

• A) 6.11 years.
• B) 6.25 years.
• C) 7.96 years.
• D) 8.33 years.

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