A Project Manager Is Using the Payback Method to Make

question 66

Multiple Choice

A project manager is using the payback method to make the final decision on which project to undertake. The company has a 15% required rate of return and expects a 5% rate of inflation for the following five years. What is the discounted payback of a project that has cash flows as shown in the table?

• A) 3.9 years
• B) 4.3 years
• C) 4.6 years
• D) 4.1 years

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Definitions:

Direct Labor Cost

The total cost of all labor that can be directly attributed to the manufacturing or production of goods or services.

Controllable Cost

Expenses that can be influenced or managed by decisions made by a manager or a business, such as materials or labor.

Supervisor

An individual in charge of overseeing and directing the work of a group of people.

Direct Materials

Raw materials that are used in the manufacturing process and are directly incorporated into the finished product.