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Sky High Company Is Considering the Purchase of an Investment

Question 51

Multiple Choice

Sky High Company is considering the purchase of an investment of $250,000. Data related to the investment are as follows:
Year 1 cash flows $133,000
Year 2 cash flows $137,000
Year 3 cash flows $125,000
Year 4 cash flows $130,000
Salvage value of new investment $25,000
Proceeds from disposal of old investment $22,000
Investment in working capital $14,000
Tax Rate 21%
With a discount rate of 9%, what is the payback period with non-uniform cash flows of the investment?


A) 2.1 years.
B) 2.0 years.
C) 1.9 years.
D) 1.8 years.

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