Garner Inc.is considering a project that has the following cash flow data.What is the project's payback? $\begin{array}{lcccc}
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & -\$ 350 & \$ 200 & \$ 200 & \$ 200
\end{array}$
A) 1.42 years
B) 1.58 years
C) 1.75 years
D) 1.93 years
E) 2.12 years

Question

Quizplus · Accepted Answer

$$\begin{array} { l c c c c } 
\text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Cash flowr } & - \$ 350 & \$ 200 & \$ 200 & \$ 200 \
\text { Cumulative CF } & - \$ 350 & - \$ 150 &  \$ 50 & \$ 250\
\text { Payback }=1.75 \text { years }& -  &- &1.75& -\
\end{array}$$ Payback = last year before cum CF turns positive + abs.val.last neg.cum CF/CF in payback year.

Garner Inc Year 0123 Cash flows −$350$200$200$200\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 350 & \$ 200 & \$ 200 & \$ 200\end{array} Year Cash flows ​0−$350​1$200​2$200​3$200​

Garner Inc $\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 350 & \$ 200 & \$ 200 & \$ 200\end{array}$