Question

A company is considering investing in loading equipment. The project would require an investment of $96173 and would have a useful life of 4 years. The cash flows associated with the project are the following:

	Year	Cash Flow
	1	$52589
	2	21570
	3	42689
	4	28939

What would the payback period of the project be?

Select one:

a. 3.00 years

b. 3.52 years

c. 1.83 years

d. 2.52 years

R8 Co. is considering one of three projects, each of which will cost $42000. The expected cash flows for each project are:

	Project A	Project B	Project C
Year 1	$10814	$28003	$3147
Year 2	21102	20985	15257
Year 3	11099	7359	13289
Year 4	8507	10664	17360

R8’s maximum acceptable payback period for accepting projects is 2 years. What is the payback period of a project that would be considered acceptable?

Select one:

a. 1.50 years

b. 1.67 years

c. 3.59 years

d. 2.91 years

Answer 1