A Project Has an Initial Cost of $6,500

question 74

Multiple Choice

A project has an initial cost of $6,500.The cash inflows are $900,$2,200,$3,600,and $4,100 over the next four years,respectively.What is the payback period?

• A)1.73 years
• B)2.51 years
• C)2.94 years
• D)3.51 years
• E)3.94 years

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Definitions:

Salvage Value

The anticipated market value of an asset once it reaches the end of its operational lifespan.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in capital budgeting and investment valuation.

Earnings Before Interest And Taxes (EBIT)

A measure of a firm's profit that includes all incomes and expenses except interest and income tax expenses.

Sales Volume

refers to the number of units sold within a reporting period, used as a measure of business performance and market demand.