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The management of Truelove Corporation is considering a project that would require an initial investment of $336,990 and woul
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Answer #1

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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