Consider an Investment with an Initial Cost of $20,000 and Is

question 111

Multiple Choice

Consider an investment with an initial cost of $20,000 and is expected to last for 5 years.The expected cash flow in years 1 and 2 are $5,000,in years 3 and 4 are $5,500 and in year 5 is $1,000.The total cash inflow is expected to be $22,000 or an average of $4,400 per year.Compute the payback period in years.

• A)3.18 years
• B)3.82 years
• C)4.00 years
• D)4.55 years
• E)None of the above.

---

Definitions:

GDP

Gross Domestic Product, the total value of all goods and services produced within a country over a specific time period, reflecting the overall economic health of the country.

Gold Standard

A financial regime where the national currency or banknotes are directly pegged to the value of gold.

Exchange Rate

The rate at which one currency can be exchanged for another.

Determined

A term that implies a firm or persistent resolution to achieve a particular outcome or objective.