An Initial Investment of $42,000 Is Expected to Generate Annual

question 9

Multiple Choice

An initial investment of $42,000 is expected to generate annual cash flows of $10,000, $15,000, $15,000, and $12,000, respectively. Assume straight- line depreciation and ignore income taxes. The payback period is:

• A) 3.83 years
• B) 3 years
• C) 3.17 years
• D) indeterminable because the cash flows are uneven

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