A Project Manager Is Using the Payback Method to Make

question 49

Multiple Choice

A project manager is using the payback method to make the final decision on which project to undertake.The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years.What is the discounted payback of a project that has cash flows as shown in the table? $$\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - \$ 100,000 \\\hline 1 & \$ 20,000 \\\hline 2 & \$ 50,000 \\\hline 3 & \$ 50,000 \\\hline 4 & \$ 25,000 \\\hline 5 & \$ 500,000 \\\hline\end{array}$$

• A) 3.4 years
• B) 2.6 years
• C) 5.0 years
• D) 4.2 years

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Definitions:

Visual Cortex

The part of the cerebral cortex that processes visual information, located in the occipital lobe of the brain.

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A visual illusion where the Moon appears larger near the horizon than it does while higher up in the sky.

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A perceptual phenomenon where the perceived size of an object remains constant despite changes in the distance from which it is viewed.

Motion Parallax

A depth cue in visual perception where objects closer to the observer move faster across the visual field than objects further away.