A project manager is using the payback method to make the final decision on which project to undertake. The company has a 15% required rate of return and expects a 5% rate of inflation for the following five years
What is the discounted payback of a project that has cash flows as shown in the table?
Year Cash Flow
0 -$500,000
1 $50,000
2 $75,000
3 $150,000
4 $150,000
5 $750,000
A) 3.9 years
B) 4.3 years
C) 4.6 years
D) 4.1 years
B
Business
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