Author Question: The payback method of capital budgeting approach to an investment decision ________. (Read 51 times)

Chloeellawright · **on:** Mar 6, 2021

Question 1

The net initial investment for a piece of construction equipment is $2,900,000. Annual cash inflows are expected to increase by $500,000 per year. The equipment has an 10-year useful life. What is the payback period?
◦ 10.00 years
◦ 7.40 years
◦ 5.80 years
◦ 4.80 years

Question 2

The payback method of capital budgeting approach to an investment decision ________.
◦ considers cash flows over the life of the investment
◦ assumes that cash flows occur uniformly throughout the year
◦ considers time value of money
◦ ignores the initial investment

jaykayy05 · **Reply #1 on:** Mar 6, 2021

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