Question

A project with a calculated payback period of 3.7 means the payback period is rounded a....

A project with a calculated payback period of 3.7 means the payback period is rounded
a. four years
b. three years and five months
c. three years and nine months
d. three years and seven months
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Answer #1

Payback period = 3.7 years

This means that the payback period is three years and some additional months. The additional months will be calculated by dividing the actual months by 12.

Therefore 0.70 represents 8.5 months which some less than 9 months and as the rounding off the digit will consider then it will be 9 months.

= 8.5/12

= 0.70

Therefore 3.7 years of payback period means three years and nine months.

Therefore the correct option is C

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