Ellis Retail is considering an investment in a delivery truck. Ellis has found a used truck that he can purchase for $8,000 . He estimates the truck would last six years and increase his store's net cash revenues by $2,000 per year. At the end of six years, the truck would have no salvage value and would be discarded. Ellis will depreciate the truck using the straight-line method. Refer to Ellis
Retail. What is the payback period on the investment in the new truck?
a. 12 years
b. 6 years
c. 4 years
d. 2 years
C
$8,000/$2,000 = 4 years
Business
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