Use the Table for the Question(s)below

question 18

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows:
-Assume the appropriate discount rate for this project is 15%.The payback period for this project is closest to:

• A)3.0
• B)2.5
• C)2.0
• D)4.0

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Definitions:

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

Variations in the income of an individual or an economy and the subsequent effects on the demand for goods or services.

Discrimination

Unfair or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.

Profitable

A state or condition of yielding a financial profit or gain; it is often considered after all expenses have been deducted.