The board of directors just approved an $18 million engineering construction design contract. The services...
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Accounting
The board of directors just approved an $18 million engineering construction design contract. The services are expected to generate new annual net revenue of $3 million. The contract has a potentially lucrative repayment clause or cancellation value (CV) of $3 million paid to the directors at any time the contract is canceled during the 10 years of the contract period. Calculate the payback period, assuming a cancelled contract with the CV occurring at the payback period. Use MARR = 10%. Round your response to the nearest tenth of a year.
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