A 25- Year Project Has a Cost of $1,500,000 and Has

question 193

Multiple Choice

A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate
The payback of the project.

• A) 2.25 years
• B) 2.75 years
• C) 3.25 years
• D) 3.75 years
• E) 4.25 years

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Definitions:

Limited Liability Company

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Tax Treatment

The specific methodology applied to determine the amount of taxes owed by an individual or business.

Limited Liability

A legal structure where a company's owners are not personally liable for the company's debts or liabilities.

Partnership

A sanctioned form of business collaboration among two or more persons who equally participate in managing the business and dividing its profits.