Reference: 10-02
Oriental Company Has Gathered the Following Data on a Proposed

Reference: 10-02
Oriental Company has gathered the following data on a proposed investment project: $$\begin{array} { | l | l | } \hline \text { Investment in depreciable equipment } & \$ 200,000 \\\hline \text { Annual net cash flows } & \$ 50,000 \\\hline \text { Life of the equipment } & 10 \text { years } \\\hline \text { Salvage value } & \$ 20 \\\hline \text { Discount rate } & 10 \% \\\hline\end{array}$$ The company uses straight-line depreciation on all equipment.
-The payback period for the investment is closest to:

A) 5.0 years.
B) 3.0 years.
C) 1.0 years.
D) 0.2 years.

Correct Answer:

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