question archive What is this project's payback? Year 0 1 2 3 Cash flows -$925 - $500 $525 $550 a
What is this project's payback? Year 0 1 2 3 Cash flows -$925 - $500 $525 $550 a
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What is this project's payback? Year 0 1 2 3 Cash flows -$925 - $500 $525 $550 a. 2.81 years b.2.02 years O c. 2.43 years O d. 1.81 years O e. e. 1.99 years
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| Statement showing computation: | ||
| Payback period of Option1: | ||
| Time | Amount | Cumulative |
| - | (925.00) | (925.00) |
| 1.00 | 500.00 | (425.00) |
| 2.00 | 525.00 | 100.00 |
| 3.00 | 550.00 | 650.00 |
| Payback period= 1+425/525 | ||
| Payback period= 1+0.81= 1.81 | ||
| So correct answer is d)1.81 years |
