Guerilla Radio Broadcasting has a project available with the following cash flows :

Guerilla Radio Broadcasting has a project available with the following cash flows :
 

Year	Cash Flow
0	−$15,900
1	6,500
2	7,800
3	4,300
4	3,900

What is the payback period?

Multiple Choice

Top of Form

2.37 years

Correct

3.00 years

2.64 years

1.63 years

2.77 years

Bottom of Form

Explanation

Amount short after 2 years = $15,900 − 6,500 − 7,800
Amount short after 2 years = $1,600

Payback period = 2 + $1,600/$4,300
Payback period = 2.37 years