What Is the Payback Period for Tangshan Mining Company's New

question 109

Multiple Choice

What is the payback period for Tangshan Mining company's new project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3, and $1,800,000 in year 4?

• A) 4.33 years
• B) 3.33 years
• C) 2.33 years
• D) 1.33 years

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Definitions:

Savings

The portion of income not spent on consumption or taxes, often set aside for future use or investment.

Cash In

The process of liquidating assets or securities for the purpose of extracting cash, often related to investments or savings.

Accounts

Records or statements that track financial transactions and positions of an individual or organization.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, reflecting the time value of money.