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

question 37

Multiple Choice

Consider an investment with an initial cost of $20,000 and is that expected to last for 5 years.The expected cash flows in years 1 and 2 are $5,000, 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 years
• B)3.82 years
• C)4.00 years
• D)4.55 years
• E)None of the above

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