Wells Inc Is Considering a Project That Has the Following Cash

question 75

Multiple Choice

Wells Inc. is considering a project that has the following cash flow data. What is the project's payback?

• A) 1.62 years
• B) 1.80 years
• C) 2.00 years
• D) 2.20 years

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Definitions:

Collateral

Assets that are offered to secure a loan or other credit and that can be seized by the lender if the loan is unpaid.

Secured Parties

Creditors who have the right to seize collateral if a debtor fails to fulfill their obligation under a secured agreement.

Unsecured Creditors

Creditors who have extended credit without the protection of collateral, making their claims on a debtor’s assets secondary to those of secured creditors.

Collateral

Property or assets pledged by a borrower to secure a loan or other credit, and subject to seizure on default.