An Investment of $400,000 Is Expected to Generate the Following

question 72

Multiple Choice

An investment of $400,000 is expected to generate the following cash flows: $$\begin{array} { l r } \text { Year 1 } & \$ 60,000 \\\text { Year 2 } & \$ 120,000 \\\text { Year 3 } & \$ 50,000 \\\text { Year 4 } & \$ 150,000 \\\text { Year 5 } & \$ 200,000\end{array}$$ What is the investment's payback period?

• A) 4.1 years
• B) 3.5 years
• C) 4.4 years
• D) 5.1 years

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Definitions:

Unemployment Levels

The proportion of the labor force that is jobless and actively seeking employment.

Price Level

An indication of the average prices of goods and services in an economy at a specific time, often used to measure inflation.

Nominal Wages

The amount of money paid to an employee before adjustments for factors like inflation, not reflecting the real purchasing power of the income.

Real Wages

Wages adjusted for inflation, representing the actual purchasing power of income received by workers.