Consider an Investment with an Initial Cost of £20,000 and Is

question 16

Multiple Choice

Consider an investment with an initial cost of £20,000 and is expected to last for 5 years.The expected cash flow in years 1 and 2 are £5,000, in years 3 and 4 are £5,500 and in year 5 is £1,000.
The total cash inflow is expected to be £22,000 or an average of £4,400 per year.Compute the
Payback period in years.

• A)3.18 years.
• B)3.82 years.
• C)4.00 years.
• D)4.55 years.
• E)None of the above.

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Definitions:

Consumption Proportions

The ratios at which various goods and services are consumed by an individual or in an economy.

Price Change

A variation in the price level of goods or services over a period of time, which can affect demand, supply, and market equilibrium.

Initial Endowment

The initial set of assets, goods, or resources individuals or entities possess before engaging in transactions or economic activities.

Kumquats

Small, orange citrus fruits with a sweet and tangy flavor, edible both peel and flesh.