A Company Is Considering Two Projects -Refer to the Figure

A company is considering two projects.
$$\begin{array} { l l l } & \text { Project A } & \text { Project B } \\\text { Initial investment } & \$ 150,000 & \$ 150,000 \\\text { Cash inflow Year 1 } & \$ 50,000 & \$ 40,000 \\\text { Cash inflow Year 2 } & \$ 50,000 & \$ 40,000 \\\text { Cash inflow Year 3 } & \$ 50,000 & \$ 40,000 \\\text { Cash inflow Year 4 } & \$ 50,000 & \$ 60,000 \\\text { Cash inflow Year 5 } & \$ 50,000 & \$ 80,000\end{array}$$
-Refer to the Figure.What is the payback period for Project A?

A) 2 years
B) 2.5 years
C) 3 years
D) 3.5 years

Correct Answer:

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