Ask Question
8 January, 18:42

The management of Lanzilotta Corporation is considering a project that would require an investment of $228,000 and would last for 6 years. The annual net operating income from the project would be $108,000, which includes depreciation of $29,000. The scrap value of the project's assets at the end of the project would be $15,000. The cash inflows occur evenly throughout the year.

The payback period of the project is closest to (Ignore income taxes.) : (Round your answer to 1 decimal place.)

+2
Answers (1)
  1. 8 January, 19:11
    0
    Answer:The investment cost is $280,000

    The expected useful life of the investment is 66 years

    The annual net operating income is $114,000

    The annual depreciation expense is 31,000

    The annual cash inflows for this project will include net operating income and depreciation expense (non-cash item) is $145,000 ($114,000 + $31,000)

    The payback period formula is used to calculate the period

    Payback Period = Investment Cost / net cash inflow per year

    =$280,000 / $145,000

    = 1.93 years
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The management of Lanzilotta Corporation is considering a project that would require an investment of $228,000 and would last for 6 years. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers