Which of the following statements is true for a project with $20,000 initial cost, cash inflows of $5,800 per year for six years, and a discount rate of 15 percent?
A)its payback period is roughly 3 1/2 years.
B)its NPV is $2,194.
C)its IRR is 1.85 percent.
D)its profitability index is 0.109.

Question

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial cost by the annual cash inflow, which gives approximately 3.45 years.

Which of the Following Statements Is True for a Project