Suppose you have put $5,000 into a project that should generate cash inflows of $1,250 for each of the next 5 years.How long will it take to recover your initial investment?
A) 3 years
B) 3.5 years
C) 4 years
D) 4.2 years

Question

Quizplus · Accepted Answer

To recover the initial investment of $5,000, we need to divide the investment by the cash inflow per year:

$5,000 ÷ $1,250 = 4

Therefore, it will take 4 years to recover the initial investment. Therefore, the correct choice is C.

Suppose You Have Put $5,000 into a Project That Should