(Ignore Income Taxes in This Problem

question 71

Essay

(Ignore income taxes in this problem. )The management of Fowkes Corporation is considering a project that would require an initial investment of $331,000 and would last for 8 years.The annual net operating income from the project would be $54,000,including depreciation of $40,000.At the end of the project,the scrap value of the project's assets would be $11,000.
Required:
Determine the payback period of the project.Show your work!

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Definitions:

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Common Stock Account

An equity account that represents the ownership interest of shareholders in a corporation, recorded at par value or issued price.