Question: The following will be used for the next two questions: A proposed project lasts 4 years has an initial fixed asset investment of 51.8 million
The following will be used for the next two questions: A proposed project lasts 4 years has an initial fixed asset investment of 51.8 million (dep. straight line to zero over 4 year project life) and an initial investment in net working capital of $250.000. The project will generate $817.250 in annual operating cash flow (OCF). The company will be able to sell the fixed asset for $300.000 at the end of the project. Tax rate is 35% and required return on the project is 15%. What is the payback period, based on operating cash flow, for the project? O 2.51 years O 5.0 years O 3.0 years 0 2.2 years O 3.5 years
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