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Crank
4 years ago
14

Northfield Casino is considering converting the Polsky Building at University of Akron into a state-of-the-art gaming parlor. Th

is expansion project will require an initial outlay of $75,000,000 with a project life of five years. Cash flows from operating the new parlor are expected to be $25,000,000 every year for the next five years. The parlor will be sold for $50,000,000 at the end of five years. The project's required rate of return, or discount rate is 18%. Based on this information: The project's payback period is:______.
a. 2.25 Years.
b. 2.5 Years.
c. 2.75 Years.
d. 3 Years.
e. 3.2 Years.
Business
1 answer:
Maurinko [17]4 years ago
4 0

Answer:

d. 3 Years.

Explanation:

Payback period calculates the amount of time it takes to recover the amount invested in a project from its cumulative cash flows.

Payback period = amount invested / cash flow

$75,000,000 / $25,000,000 = 3 years

I hope my answer helps you

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