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lesya [120]
3 years ago
7

A company is considering two projects.

Business
1 answer:
zlopas [31]3 years ago
6 0

Answer:

Option (B) is correct.

Explanation:

Given that,

Project 1:

Initial investment = $120,000

Cash inflow Year 1, Year 2, Year 3, Year 4, Year 5 = $40,000

Hence,

Annual cash flow = $40,000

Payback period:

= Initial investment ÷ annual cash inflow

= $120,000 ÷ $40,000

= 3 years

Therefore, the payback period for Project I is 3 years.

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