Oriental Corporation has gathered the following data on a proposed investment project:
Investment in depreciable equipment $ 200,000
Annual net cash flows $ 50,000
Life of the equipment 10 years
Salvage value $ 0
Discount rate 10 %
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
The payback period for the investment would be: Multiple Choice
a. 2.41 years
b. 0.25 years
c. 10 years
d. 4 years
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