Dext Inc. is contemplating a capital investment of $85,000.

The cash flows over the project’s four

years are:
                                           Expected Annual           Expected Annual
                    Year                   Cash Inflows                 Cash Outflows
                       1                         $30,000                         $12,000
                       2                           45,000                           20,000
                       3                           60,000                           25,000
                       4                           50,000                           30,000
The cash payback period is
a.   3.35 years.
b.   2.30 years.
c.   2.17 years.
d.   3.47 years.

year investment outflows inflows net inflow cummulative

(investment-net
inflow)

0 -85000
1 12000 30000 18000 -67000
2 20000 45000 25000 -42000
3 25000 60000 35000 -7000
4 30000 50000 20000 13000

3 years+(7000/20000)

=3.35 years