Consider a Ten-Year Project That Costs $40,000 Today,which Is Expected

question 139

Multiple Choice

Consider a ten-year project that costs $40,000 today,which is expected to generate $6,000 at the end of the second year and then the cash flows will increase by $1,000 for three years and then stagnate for the rest of the project life.The cost of capital is 8 percent.What is discounted payback period?

• A) 8.99 years
• B) 8.34 years
• C) 7.71 years
• D) 7.17 years

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