payback period

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 2P
icon
Related questions
Question

An investment project that requires a present investment of P210,000 will have a cash inflows of “R” pesos each year for the next five years. The project will terminate in five years. Consider the following statements (ignore income tax considerations):

I. If “R” is less than P42,000, the payback period exceeds the life of the project.
II. If “R” is greater than P42,000, the payback period exceeds the life of the project.
III. If “R” equals P42,000, the payback period equals the life of the project.

A. II and III
B. I and II
C. I and III
D. All of the statements
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT