Worthington Inc.is considering a project that has the following cash flow data.What is the project's payback? $\begin{array}{lcccc}
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & -\$ 500 & \$ 150 & \$ 200 & \$ 300
\end{array}$
A) 2.03 years
B) 2.25 years
C) 2.50 years
D) 2.75 years
E) 3.03 years

Question

Quizplus · Accepted Answer

$$\begin{array} { l c c c c } 
\text { Year } & 0 & 1 & 2 & 3 \
\hline \text { Cash flowr } & - \$ 500 & \$ 150 & \$ 200 & \$ 300 \
\text { Cumulative CF } & - \$500 & - \$ 350 &  -\$ 150 & \$ 150\
\text { Payback }=2.50 \text { years }& -  &- &-&2.50\
\end{array}$$ Payback = last year before cum CF turns positive + abs.val.last neg.cum CF/CF in payback year.

Worthington Inc Year 0123 Cash flows −$500$150$200$300\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 500 & \$ 150 & \$ 200 & \$ 300\end{array} Year Cash flows ​0−$500​1$150​2$200​3$300​

Worthington Inc $\begin{array}{lcccc}\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 500 & \$ 150 & \$ 200 & \$ 300\end{array}$