McGlothin Inc $$\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$$

question 61

Multiple Choice

McGlothin Inc.is considering a project that has the following cash flow data.What is the project's payback? $$\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$$

• A) 1.86 years
• B) 2.07 years
• C) 2.30 years
• D) 2.53 years
• E) 2.78 years

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Definitions:

Semiannual Coupon

A bond or other fixed-income security that pays interest to the holder every six months.

Interest Rate

The price, in terms of a percentage of the principal, that a borrower needs to pay a lender to utilize their financial resources.

Bond's Price

The market price for which a bond is bought or sold, influenced by factors like interest rates, the bond's credit quality, and its maturity date.

Market Value Basis

The valuation of assets or securities based on the current market prices as opposed to historical costs or theoretical values.