Which of the following values comes closest to the payback of a project that requires an initial investment of $34, produces cash flows of $12 for 5 consecutive years beginning at the end of year 1, and provides a final cash flow at the end of year 6 of $100? The project's required rate of return is 13%. Select one: a. 3 years b. 4 years c. Undefined-there is no payback for this project. d. 6 years e. 5 years
Which of the following values comes closest to the payback of a project that requires an initial investment of $34, produces cash flows of $12 for 5 consecutive years beginning at the end of year 1, and provides a final cash flow at the end of year 6 of $100? The project's required rate of return is 13%. Select one: a. 3 years b. 4 years c. Undefined-there is no payback for this project. d. 6 years e. 5 years
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
Related questions
Question
Which of the following values comes closest to the payback of a project that requires an initial investment of $34, produces cash flows of $12 for 5 consecutive years beginning at the end of year 1, and provides a final cash flow at the end of year 6 of $100? The project's required
Select one:
a. 3 years
b. 4 years
c. Undefined-there is no payback for this project.
d. 6 years
e. 5 years
Expert Solution
Step 1
here below is the table to find no of years
| year | cashflows | cumulative cashflows |
| 0 | 34 | (34) |
| 1 | 12 | (22) |
| 2 | 12 | (10) |
| 3 | 12 | 2 |
| 4 | 12 | 14 |
| 5 | 12 | 26 |
| 6 | 100 | 126 |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub