Homework Answers
Step-1, Calculation of the annual cash flow
The annual cash flow = Annual net operating income + Depreciation expenses
= $28,800 + $44,170
= $72,970 per year
Step-2, The Payback period of the Project
The Payback period of the Project = Initial Investment Cost / Annual cash flow
= $336,990 / $72,970 per year
= 4.62 Years
“Hence, the Payback period of the Project will be 4.62 Years”
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