Estimate the payback period for the investment is

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The SNIPER Company is planning a $200,000 equipment investment that 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 Inflows

1 $120,000
2 60,000
3 40,000
4 40,000
5 40,000
Total $300,000

Problem 1: 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.

Problem 2: What is the payback reciprocal?

a. 1.33
b. 0.60
c. 0.20
d. 0.40

Reference no: EM132711538

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