Answer:
Helberg Corporation
The payback period of the period is closest to:
1 year and 6 months (1 1/2 years).
Explanation:
a) Data and Calculations:
Required project investment = $203,000
Scrap value of project's assets = $23,000
Depreciable amount of project's assets = $180,000
Period of project = 6 years
Annual depreciation = $30,000 ($180,000/6)
Annual net operating income = $103,000
Annual cash inflow = $133,000 ($103,000 + $30,000)
b) The payback period of the project = $203,000/$133,000 = 1.53 or 1 year and 6 months. This shows that the project will break-even in a year and six months, when the project's cash outflow equals the cash inflow.
