Forrest Ltd Is Evaluating an Investment Proposal Using the Payback

question 37

Multiple Choice

Forrest Ltd is evaluating an investment proposal using the payback method. Cash inflows are expected to be $8000 in year 1, $8700 in year 2, $6000 in year 3, and $4800 in year 4. The initial investment required is $18 000. Assuming even cash inflows within each year what is the payback period?

• A) 2.06 years
• B) 3.00 years
• C) 2.22 years
• D) 2.50 years

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