Consider the Following Four-Year Project

question 54

Multiple Choice

Consider the following four-year project.The initial outlay or cost is $180,000.The respective cash inflows for years 1,2,3 and 4 are: $100,000,$80,000,$80,000 and $20,000.What is the discounted payback period if the discount rate is 11%?

• A)About 1.667 years
• B)About 2.000 years
• C)About 2.135 years
• D)About 2.427 years

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Definitions:

Outside Supplier

A third-party provider that delivers products or services to an organization, which the organization does not manufacture or create internally.

Variable Expenses

Expenditures that adjust in response to the operations of a company.

Transfer Price

A price charged for goods or services transferred between departments or divisions of the same company or between affiliated companies.

Valve Division

Refers to a specialized business unit within a company that focuses on the production and sales of valves.