Consider the following two projects: The payback period for project A is closest to ________.
A) 1.9 years
B) 2.3 years
C) 2.6 years
D) 2.1 years

Question

Consider the following two projects:  The payback period for project A is closest to ________.
A) 1.9 years 
B) 2.3 years 
C) 2.6 years 
D) 2.1 years

Quizplus · Accepted Answer

D) Payback period: It is clear that the project is not paid off after two years since we have only received 90 toward the 100 investment. To calculate the fraction of the third year, we take the $10 yet to be repaid 11ea84dc_f556_8126_9a63_01af2f35e715_TB1316_00_TB1316_00 so, the payback is 2.1 years.

Consider the Following Two Projects: the Payback Period for Project