Question

Given the following information and assuming straight-line depreciation to zero, what is the payback period for this project? The project requires an initial investment of $900,000; has a life of 6 years; produces cost savings of $190,000 per year; has a tax rate of 35 percent; and a discount rate of 9 percent. The fixed assets will be sold for $50,000 at the end of year 6.A) 2.54 yearsB) 3.67 yearsC) 3.93 yearsD) 5.10 yearsE) The project never pays back.

Answer 1

E) The project never pays back.

Step-by-step explanation:

Please see attachment.