A Project Manager Is Using the Payback Method to Make

Multiple Choice

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 four years.What is the non-discounted payback of a project that has cash flows as shown in the table? $$\begin{array} { | l | l | } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - \$ 250,000 \\\hline 1 & \$ 50,000 \\\hline 2 & \$ 60,000 \\\hline 3 & \$ 70,000 \\\hline 4 & \$ 80,000 \\\hline\end{array}$$

A) 3.875 years
B) 3.625 years
C) 3.750 years
D) 3.500 years