Question - Logan, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available:
|
|
Investment A
|
Investment B
|
|
Initial capital investment
|
$102,000
|
$150,000
|
|
Estimated useful life
|
10 years
|
10 years
|
|
Estimated residual value
|
0
|
$23,000
|
|
Estimated annual net cash inflow for 10 years
|
$20,000
|
$46,000
|
|
Required rate of return
|
10%
|
14%
|
Calculate the payback period for Investment A. (Round your answer to two decimal places.)
(a) 3.04 years
(b) 3.95 years
(c) 1.00 years
(d) 5.10 years