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Payback Period for $240,000 Investment Project

Orbitz Company has gathered the following data on a proposed investment project:

Investment Required Equipment: $240,000
Annual Cash Inflows: $50,000
Salvage Value: $0
Life of the Investment: 8 years
Required Rate Return: 10%

The payback period for the investment is closest to:

a) 5.0 years
b) 0.2 years
c) 2.5 years
d) 4.8 years

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