Assuming that the money is received evenly across the year,what will be the payback period if Jack decides to invest in the CZ84 double cut frame saw?
A) 3 years and 7 months
B) 2 years and 11 months
C) 2 years and 3 months
D) 3 years and 1 month

Question

Quizplus · Accepted Answer

To calculate the payback period, we need to divide the initial cost of the investment by the annual cash inflow.

The initial cost of the CZ84 double cut frame saw is $1,400.

The annual cash inflow from selling the additional products using the frame saw is $500.

Therefore, the payback period can be calculated as follows:

Payback Period = Initial Cost / Annual Cash Inflow

Payback Period = $1,400 / $500 per year

Payback Period = 2.8 years or 2 years and 11 months (rounded up)

Therefore, the best choice is B, the payback period for the investment in the CZ84 double cut frame saw is 2 years and 11 months.

Assuming That the Money Is Received Evenly Across the Year,what