What Is the Payback Period for a Project with an Initial

question 154

Multiple Choice

What is the payback period for a project with an initial investment of $180,000 that provides an annual cash inflow of $40,000 for the first three years and $25,000 per year for years four and five,and $50,000 per year for years six through eight?

• A) 5.80 years
• B) 5.20 years
• C) 5.40 years
• D) 5.59 years

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Definitions:

Resource

Assets, materials, or inputs utilized in the production of goods and services.

First Year

Refers to the initial year of an activity or entity's existence, often used in the context of a company's operations or a student's academic experience.

Extraction Costs

The expenses associated with the removal of raw materials from the earth or the harvesting of natural resources.

User Costs

Expenses incurred by consumers or firms for the use of assets, services, or capital, which can affect decisions on consumption or investment.