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      Question

      A project has initial investment ₹1,00,000 and

      expected cash inflows ₹30,000 each year for 5 years. Payback period is:
      A 3 years 4 months Correct Answer Incorrect Answer
      B 3 years 5 months Correct Answer Incorrect Answer
      C 3 years 8 months Correct Answer Incorrect Answer
      D 3 years 4 weeks Correct Answer Incorrect Answer
      E Exactly 4 years Correct Answer Incorrect Answer

      Solution

      Payback = 3 + (10,000/30,000) = 3.333 years ≈ 3 years 4 months.

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