A Company Is Considering Two Projects -Refer to the Figure

A company is considering two projects.
$\begin{array}{lrr} & \text { Froject I } & \text { Froject II } \\\text { Initial investment } & \$ 60,000 & \$ 60,000 \\\text { Cash inflow Year 1 } & \$ 30,000 & \$ 15,000 \\\text { Cash inflow Year 2 } & \$ 30,000 & \$ 15,000 \\\text { Cash inflow Year 3 } & \$ 30,000 & \$ 30,000 \\\text { Cash inflow Year 4 } & \$ 30,000 & \$ 70,000 \\\text { Cash inflow Year 5 } & \$ 30,000 & \$ 70,000\end{array}$
-Refer to the Figure.What is the payback period for Project II?

A) 1 year
B) 2 years
C) 2.5 years
D) 3 years

Correct Answer:

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