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Answer to Business question: Payback period

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Woodgate Inc. is considering a project that has the following after-tax operating cash flows (in millions of dollars):

Year Project Cash Flow
0 -$300
1 125
2 75
3 200
4 100

Woodgate Inc.'s finance department has concluded that the project has a 10 percent cost of capital.

Refer to Woodgate Inc. What is the project's payback period?
a. 2.00 years
b. 2.50 years
c. 2.65 years
d. 2.83 years
e. 3.00 years

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Solution Summary

Calculates payback period.

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Woodgate Inc. is considering a project that has the following after-tax operating cash flows (in millions of dollars):

Year Project Cash Flow
0 -$300
1 125
2 75
3 200
4 ...

Purchase this Solution


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