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Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $130,854. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $79,600, and annual cash outflows would increase by $41,000. Compute the cash payback period. (Round answer to 2 decimal places, e. G. 10. 52. )

Respuesta :

The cash payback period of the long-term investment project called ZIP is 3.39.

Computation of the cash payback period

The cash payback period can be computed as follows:

Annual net benefit = Annual cash inflows - Annual cash outflows

Annual Net benefit = $79,600 - $41,000

Annual Net benefit = $38,600

Therefore, we have:

Cash payback period = Initial investment / Annual net benefit

Cash payback period = 130,854 / $38,600

Cash payback period = 3.39

Learn more about the payback period here: https://brainly.com/question/15586019.

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