Resnick Inc

question 89

Multiple Choice

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

• A) 1.42 years
• B) 1.58 years
• C) 1.75 years
• D) 1.93 years

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Definitions:

Annuity Growth Rate

The rate at which the value of an annuity investment increases over time due to interest and investment income.

Present Value

The current estimation of a future financial sum or series of payments, when discounted at a specific rate of return.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the central bank's discount window; also used in discounted cash flow (DCF) analysis to present value future cash flows.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity and financial stability.