Shields Company Has Gathered the Following Data on a Proposed

question 68

Multiple Choice

Shields Company has gathered the following data on a proposed investment project:
$\begin{array}{|l|r|}\hline \text { Investment Required in Equipment } & \$ 400,000 \\\hline \text { Annual Cash Inflows } & \$ 80,000 \\\hline \text { Salvage Value } & \$-0- \\\hline \text { Life of the Investment } & 10 \text { years } \\\hline \text { Discount Rate } & 10 \% \\\hline\end{array}$
(Ignore income taxes in this problem.)
-The payback period for the investment is closest to which of the following?

• A) 0.2 years.
• B) 1.0 years.
• C) 3.0 years.
• D) 5.0 years.