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Answer :
The payback period for the investment is 10 years, which is not represented by any of the given options (Option A, B, C, or D).
To calculate the payback period for the investment, we need to determine the time it takes for the cumulative cash flows to equal or exceed the initial investment of $150,000.
The cash flows for the project are as follows:
Year 1: $45,000
Years 2 onwards: $15,000 per year
We can calculate the payback period by dividing the initial investment by the annual cash flow:
Payback period = Initial investment / Annual cash flow
Payback period = $150,000 / $15,000 = 10 years
None of the given options (Option A, B, C, or D) match the correct payback period. The correct payback period for this investment is 10 years.
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