Question

22. Chapter b Multiple Choice 11-083, Section b Multiple Choice 11-083, Problem b Multiple Choice 11-083 Susmel Inc. is considering a project that has the following cash flow data. What is the project's payback? Year 0 1 2 3 Cash flows -$475 $150 $200 $300 a. 2.88 years b. 2.85 years c. 2.47 years d. 2.42 years e. 1.96 years

Answer 1

Payback period=full years until recovery + unrecovered cost at the start of the year/cash flow during the year

Payback period= 2 years + 125/ 300

                         = 2 years + 0.42

                         = 2.42 years.

Hence, the answer is option b.

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