You are the project manager for an information technology division of a large financial services firm in the United States. Your company offers a web based trading platform that provides options and futures trading for U.S commodities markets. Due to the rise in popularity of futures and options trading, your company has grown rapidly. In fact, due to rapid growth, the company’s I.T. infrastructure is unable to meet the growing demands. To keep up with the demands you have been assigned the responsibility of upgrading the company’s network and company’s infrastructure. You have been asked to calculate the payback period for the project that is to be completed in the next 24 months. The IRR of the project is 12% and the annual savings will be $2million. The total cost of project will be $6million dollars. The cost of capital used by the company during previous projects is 5%. What is the payback period for this project?
A. 2 years
B. 3 years
C. 4.5 years
D. 5.5 years
E. 4 years
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