A potential project involves an initial investment in machinery of RO.1,200,000 and has the following operating annual cash inflows. Year 1 – RO. 155,000 Year 2 – RO. 555,000 Year 3 – RO. 455,000 Year 4 – RO. 210,000 Year 5 – RO. 420,000 Year 6 – RO. 320,000 Year 7 – RO. 150,000 The machinery will be sold for scrap at the end of year 7 for RO.100,000. What is the payback period of this project? NOTE (IGNORE DEPRECIATION CALCULATION) a. 4 Years and 2 Months b. 3 Years and 3 Months c. 3 Years and 2 Months d. 3 Years and 4 Months

A potential project involves an initial investment in machinery of RO.1,200,000 and has the following operating annual cash inflows. Year 1 – RO. 155,000 Year 2 – RO. 555,000 Year 3 – RO. 455,000 Year 4 – RO. 210,000 Year 5 – RO. 420,000 Year 6 – RO. 320,000 Year 7 – RO. 150,000 The machinery will be sold for scrap at the end of year 7 for RO.100,000. What is the payback period of this project? NOTE (IGNORE DEPRECIATION CALCULATION) a. 4 Years and 2 Months b. 3 Years and 3 Months c. 3 Years and 2 Months d. 3 Years and 4 Months

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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