An Outlay of $180,000 Is Expected to Yield the Following

question 137

Multiple Choice

An outlay of $180,000 is expected to yield the following cash flows: The cost of capital is 12 percent. What is the payback period?

• A)2 5/6 years
• B)2.5 years
• C)3 years
• D)3 1/3 years

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Definitions:

Simple Rate of Return

A method to estimate the profitability of an investment, calculated by dividing the net annual income by the initial investment cost.

Deliver of Prescriptions

The process or service of delivering prescribed medication to patients.

Discount Rate

In discounted cash flow analysis, this interest rate is crucial for deducing the present monetary value of cash inflows expected in future periods.

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used to assess the profitability of an investment.