You Are Considering a Project with an Initial Cost of $6,400

question 401

Multiple Choice

You are considering a project with an initial cost of $6,400. What is the payback period for this project if the cash inflows are $900, $1,350, $2,800, and $1,500 a year over the next four years,
Respectively?

• A) 3.21 years
• B) 3.48 years
• C) 3.90 years
• D) 4.21 years
• E) 4.90 years

---

Definitions:

Economic Profit

The difference between a firm's total revenue and its total costs, including both the explicit and implicit costs, representing the financial gain exceeding the opportunity costs.

Total Revenue

The gross income of a company, which is the sum of money generated from its goods or services sold before deducting any costs.

Annual Salary

The total amount of money earned by an employee in a year from their job before taxes and other deductions.

Production

The process that transforms scarce resources into useful goods and services.