A Project Has an Initial Cost of $6,500

question 74

Multiple Choice

A project has an initial cost of $6,500.The cash inflows are $900,$2,200,$3,600,and $4,100 over the next four years,respectively.What is the payback period?

• A)1.73 years
• B)2.51 years
• C)2.94 years
• D)3.51 years
• E)3.94 years

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Definitions:

Long-Run Equilibrium

A state in which all factors of production are fully adjusted to the economic conditions, leading to a situation where there is no tendency for change.

Purely Competitive Firm

refers to a company that operates in a market where there are many buyers and sellers, no barriers to entry, and the product is a commodity, leading the firm to be a price taker.

Monopolistic Competition

An economic model featuring a multitude of firms that market products which are alike but not the same, enabling a certain amount of market control and differentiation of products.