Forrest Ltd Is Evaluating an Investment Proposal Using the Payback

Multiple Choice

Forrest Ltd is evaluating an investment proposal using the payback method. Cash inflows are expected to be $8000 in year 1, $8700 in year 2, $6000 in year 3, and $4800 in year 4. The initial investment required is $18 000. Assuming even cash inflows within each year what is the payback period?

A) 2.06 years
B) 3.00 years
C) 2.22 years
D) 2.50 years