Determining annual cash flows for the investment

Reference no: EM13151895

The Keego Company is planning a $200,000 equipment investment which has an estimated five-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment.

year cash flows

1 $120,000

2 $60,000

3 $40,000

4 $40,000

5 $40,000

total $300,000

Assuming that the cash inflows occur evenly over the year, the payback period for the investment is:

a. 0.75 years

b. 1.67 years

c. 4.91 years

d. 2.50 years

Reference no: EM13151895

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