A Project Manager Is Using the Payback Method to Make

question 41

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 non-discounted payback of a project that has cash flows as shown in the table? $$\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - \$ 500,000 \\\hline 1 & \$ 50,000 \\\hline 2 & \$ 75,000 \\\hline 3 & \$ 150,000 \\\hline 4 & \$ 150,000 \\\hline 5 & \$ 750,000 \\\hline\end{array}$$

• A) 3.7 years
• B) 4.1 years
• C) 5.0 years
• D) 4.8 years

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Definitions:

Fascia

A band or sheet of connective tissue, primarily collagen, beneath the skin that attaches, stabilizes, encloses, and separates muscles and other internal organs.

Scalpel

A small, sharp knife that is used in surgeries to make incisions or cut tissues.

Probe

A device or instrument used to explore, investigate, or measure something within the body or in a scientific experiment.

Axillary Border

The lateral edge of the scapula, extending from the glenoid cavity to the inferior angle, important for muscle attachment.