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 11eaabab_c09e_79f5_b90e_eb622d94e13a_TB5536_11 so, the payback is 2.1 years.

Consider the Following Two Projects