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

---

Definitions:

Nonmanagerial Employees

Workers who do not hold supervisory or managerial positions and are typically responsible for executing specific tasks and operations.

Hardship Premium

A hardship premium (also called a foreign service premium) is an additional financial incentive offered to individuals to entice them to accept a “less than attractive” international assignment.

Recruiting Firm

A company that specializes in identifying, attracting, and placing candidates in suitable job positions.

Qualified Managers

Individuals who possess the required skills, experience, and qualifications to effectively oversee and direct a team or organization.