George Is Considering Setting Up a Business Selling Free-Range Chickens

question 10

Multiple Choice

George is considering setting up a business selling free-range chickens. He estimates his establishment costs will be $600,000 and his net cash flows for the first five years will be $100,000 in year 1, $200,000 in year 2, stabilising at $300,000 in year 3. The payback period for the investment is:

• A)3 years.
• B)3.2 years.
• C)5 years.
• D)3.8 years.