payback period

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An investment project that requires a present investment of P210,000 will have a cash inflows of “R” pesos each year for the next five years. The project will terminate in five years. Consider the following statements (ignore income tax considerations):

I. If “R” is less than P42,000, the payback period exceeds the life of the project.
II. If “R” is greater than P42,000, the payback period exceeds the life of the project.
III. If “R” equals P42,000, the payback period equals the life of the project.

A. II and III
B. I and II
C. I and III
D. All of the statements
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