Fred Hammond recently invested in a project that has an expected annual cash inflow of $7,000 for 10 years, and an expected payback period of 3

Accounting Mar 13, 2021

Fred Hammond recently invested in a project that has an expected annual cash inflow of $7,000 for 10 years, and an expected payback period of 3.6 years. How much did Fred invest in the project?

A. $19,444

$36,000
$25,200
$40,000

Expert Solution

Answer:

C . $ 25,200

Step-by-Step explanation

Payback period = 3.6 year.

Annual cash inflow = $7,000.

The total amount that would be covered during the payback period is the amount invested by Fred.

Fred investment amount = $7,000 + $7,000 + $7,000 + $4,200 = $25,200.

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