What Is the Payback Period of a Project That Requires

question 47

Multiple Choice

What is the payback period of a project that requires an initial cash outlay of $16,000 and provides cash flows of $4,500 in year 1,$5,500 in year 2,$6,500 in year 3,and $7,500 in year 4? Assume the appropriate discount rate is 10 percent.

• A) 2.08 years
• B) 2.36 years
• C) 2.68 years
• D) 2.92 years

Understand the concepts of variable costs and how they impact pricing and profit.

Calculate the total amount of fixed manufacturing cost incurred.

Calculate contribution margin per unit sold.

Determine total product and period costs for specific production volumes.

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