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Assume the following information for a capital budgeting proposal with a five-year time horizon: ...

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Accounting

Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:
Cost of equipment (zero salvage value) $ 420,000
Annual revenues and costs:
Sales revenues $ 300,000
Variable expenses $ 130,000
Depreciation expense $ 50,000
Fixed out-of-pocket costs $ 40,000

The payback period for this investment is closest to:

3.23 years.

5.25 years.

.90 years.

2.47 years.

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