Calculate the Payback Period (PP)for the Cash Flows Provided in the Table

question 7

Multiple Choice

Calculate the payback period (PP) for the cash flows provided in the table below.Note: The negative cash flow for year 0 is the initial investment for the project.

• A)0.70 years
• B)1 year
• C)1.25 years
• D)2.75 years

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Definitions:

GAAP

Generally Accepted Accounting Principles, a framework of accounting standards, principles, and procedures used in the United States.

Income Statement Information

Income Statement Information includes the revenues, expenses, and profits or losses of a company over a specified period, depicting its financial performance.

Income Statement

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The degree to which a business or activity yields profit or financial gain, measured by the ability to generate income greater than the related expenses.