Payback period for the investment


Melanie Company is considering a capital project that costs $16,000. The project will deliver the following cash flows:

Year 1 Year 2 Year 3 Year 4 Year 5
$8,000 $6,000 $5,000 $6,000 $5,000

Using the incremental approach, the payback period for the investment is:

A. 2 years.
B. 2.4 years.
C. 5 years.
D. 1.66 years.

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Accounting Basics: Payback period for the investment
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