A Company Is Considering a 5-Year Project with an Initial

question 15

Multiple Choice

A company is considering a 5-year project with an initial investment of $90,000.Cash inflows will be $30,000 for the first two years and $25,000 for the next 3 years.If the company's required rate of return is 12%, determine its discounted payback.

• A)4.40years
• B)3.60 years
• C)3.80 years
• D)4.00 years

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Definitions:

Stock C

This term is not specific; it might be a placeholder name for a hypothetical or specific stock used for analysis.

Beta

A measure of a stock's volatility in relation to the overall market; it indicates the tendency of a stock's returns to respond to swings in the market.

Portfolio

A group of investment assets held by either a person or a corporate entity.

Stock Y

A placeholder name typically used to represent a generic or hypothetical stock or equity investment in examples or discussions.