B) Option 2 10) An alternative for producing a pesticide costs of $60,000. Incom

Question

B) Option 2 10) An alternative for producing a pesticide costs of $60,000. Income is expected to be $110,000 per year. What is the payback period at 0% per year interest? A) 3 years B) 4 years C) 5 years D) 6 years will have a first cost of $250,000 and annual 11) An alternative for producing a pesticide will have a first cost of $250,000 and annual costs of $60,000. Income is expected to be $110,000 per year. What is the payback period at 8% per year interest? A) Between 4&5 B) Between 5&6 C) Between 6&7 D) Between 7 &8

Explanation / Answer

Solution :- Payback period = Initial investment / Annual net return.

= 200000 / (90000 - 50000)

= 200000 / 40000

= 5 Years.

Conclusion :- Payback period = 5 Years.

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