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Calculate the payback period for the investment

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Reference no: EM131588528

Question - The following details are provided by a manufacturing company:

 

Product line

Investment

$1,190,000

Useful life

12 years

Estimated annual net cash inflows for first year

$400,000

Estimated annual net cash inflows for second year

$390,000

Estimated annual net cash inflows for next ten years

$490,000

Residual value

$90,000

Depreciation method

Straight-line

Required rate of return

12%

Required - Calculate the payback period for the investment.

(a) 2.98 years

(b) 2.82 years

(c) 1.98 years

(d) 2.20 years

Reference no: EM131588528

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