A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% 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 -$100,000
1 $20,000
2 $50,000
3 $50,000
4 $25,000
5 $500,000
A) 3.4 years
B) 2.6 years
C) 5.0 years
D) 4.2 years
C
Business
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