A Project Has an Initial Cost of $1,900

question 201

Multiple Choice

A project has an initial cost of $1,900. The cash inflows are $0, $500, $900, and $700 over the next four years, respectively. What is the payback period?

• A) 2.71 years
• B) 2.98 years
• C) 3.11 years
• D) 3.71 years
• E) never

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Definitions:

Eli Lilly

An American pharmaceutical company known for developing a wide range of medications, including treatments for diabetes, cancer, and psychiatric disorders.

Endowments

Funds donated to institutions with the stipulation that the principal remains intact and only the investment income is spent.

After-Tax Rate

The rate of return on an investment after accounting for taxes, more reflective of the net gain to the investor.

Safety Of Principal

The assurance that an investment will be repaid or retained, primarily concerning the preservation of invested capital.