Ocean Breeze Company runs beach equipment stores along the west coast. Ocean Breeze's management estimates...
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Ocean Breeze Company runs beach equipment stores along the west coast. Ocean Breeze's management estimates that if it invests $300,000 in a new computer system, it can save $70,000 in annual cash operating costs. The system has an expected useful life of 10 years and no terminal disposal value. The required rate of return is 7% Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts. What is the payback period?
| A. | 4.29 years | |
| B. | 4 years | |
| C. | 5 years | |
| D. | 10 years |
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