An Investment Project Requires a Net Investment of $100,000

question 102

Multiple Choice

An investment project requires a net investment of $100,000. The project is expected to generate annual net cash inflows of $28,000 for the next 5 years. The firm's cost of capital is 12%. Determine the payback period for the project.

• A) 0.28 years
• B) 1.4 years
• C) 3.57 years
• D) 17.86 years

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Definitions:

Unemployment

The situation where individuals who are willing and able to work are not currently employed.

Inflation

The magnitude of growth in the overall price points for goods and services, weakening the efficacy of spending power.

Government Spending

The total amount of money expended by a government on various sectors, including infrastructure, education, defense, and social services.

Net Exports

The difference between a country's total exports of goods and services and its total imports of goods and services over a specified period.