Consider an Investment with an Initial Cost of $20,000 and Is

question 22

Multiple Choice

Consider an investment with an initial cost of $20,000 and is expected to last for 5 years. The expected cash flow in years 1 and 2 are $5000, in years 3 and 4 are $5,500 and in year 5 is $1,000. The total cash inflow is expected to be $22,000 or an average of $4,400 per year. Compute the payback period in years.

• A) 3.18
• B) 3.82
• C) 4.55
• D) 4.00