ABC Company Is Adding a New Product Line That Will

Multiple Choice

ABC Company is adding a new product line that will require an investment of $1 500 000. The product line is estimated to generate cash inflows of $300 000 the first year, $250 000 the second year, and $200 000 each year thereafter for ten more years. What is the payback period?

A) 6.00 years
B) 2.73 years
C) 7.25 years
D) 6.75 years