A Project Has an Initial Cost of $2,300

question 114

Multiple Choice

A project has an initial cost of $2,300.The cash inflows are $300,$500,$900,and $700 over the next four years,respectively.What is the payback period?

• A)2.71 years
• B)2.98 years
• C)3.11 years
• D)3.86 years
• E)Never

---

Definitions:

Straight-Line Depreciation

A method of depreciation that allocates an equal amount of the asset's cost to each year of its useful life.

Net Advantage To Leasing

The total financial benefits of leasing an asset compared to purchasing it, taking into account all costs and savings.

Resale Value

The estimated market value of an asset at the time of its sale, reflecting what a seller may realistically receive.

Incremental Cash Flow

The additional cash flow generated by a company from taking on a new project or making a new investment.