A Project Requires an Initial Outlay of $100,000, and Is

question 37

Multiple Choice

A project requires an initial outlay of $100,000, and is expected to generate annual net cash inflows of $28,000 for the next 5 years. Determine the payback period for the project.

• A)0.28 years
• B)1.4 years
• C)3.57 years
• D)17.86 years

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Definitions:

Surety Agreement

A contract where one party (surety) guarantees the performance or obligations of a second party (principal) to a third party (obligee).

Collateral

A borrower's asset that is given to a lender to secure the repayment of a loan.

Default

The failure to fulfill an obligation, especially failing to pay back a loan on time.

Surety

is a person or entity that takes responsibility for another's performance, such as fulfilling the terms of a contract or repaying a loan.