Fernando Designs Is Considering a Project That Has the Following

question 25

Multiple Choice

Fernando Designs is considering a project that has the following cash flow and WACC data.What is the project's discounted payback? $$\begin{array} { l c c c c } \text { WACC: } & { 10.00 \% } & & & \\\text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 650 & \$ 500 & \$ 500 & \$ 500\end{array}$$

• A) 1.62 years
• B) 1.58 years
• C) 1.15 years
• D) 1.47 years
• E) 1.24 years

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Definitions:

Direct Labor-Hour

The total amount of time spent by workers directly involved in the production of goods or services, often used in cost accounting.

Manufacturing Overhead Budget

An estimation of all manufacturing costs excluding direct materials and direct labor, planned over a specific period.

Cash Disbursements

The outflow of cash for expenses, purchases, or investments by a business, recorded in the cash disbursements journal.

Manufacturing Overhead Budget

An estimate of the total costs associated with the indirect production activities, excluding direct materials and direct labor, for a certain period.