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Determine the payback period

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Reference no: EM133030260

Question - Management of Red Hot Choice Ltd is considering the following investment project:

Capital Outlay $100,000

Net Profit p.a.(before Depreciation and Tax) $50,000

Depreciation p.a. $20,000

Economic Life 5 years

Salvage Value $nil

Tax Rate payable (paid in year of income) 30%

Required Rate of Return 6%

Required - Determine the payback period?

a. 3.33 years

b. 4.76 years

c. 2.86 years

d. 2.44 years

Reference no: EM133030260

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