Financial ManagementMCQQuestion 13432 of 300
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A project costs ₹8,500,000 and generates constant annual cash inflow after tax of ₹1,700,000 for 8 years. What is the Payback Period of the project?

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option A — 5.00 years

All Options:

  • A5.00 years ✓
  • B6.50 years
  • C4.40 years
  • D5.80 years

Detailed Solution & Explanation

Correct Answer: Option **A** (5.00 years) **Financial Management Derivation (Capital Budgeting - Payback Period):** Payback Period=Initial OutlayAnnual Cash Inflow=₹8,500,000₹1,700,000=5.0 years\displaystyle \text{Payback Period} = \frac{Initial Outlay\displaystyle \text{Initial Outlay}}{Annual Cash Inflow\displaystyle \text{Annual Cash Inflow}} = ₹8,500,000₹1,700,000=5\displaystyle \frac{₹8,500,000}{₹1,700,000} = 5.0  years\displaystyle \text{ years} Hence, Option A is the correct answer.

More Questions from Financial Management

A company has sales of ₹50,00,000, variable costs of ₹30,00,000, fixed operating costs of ₹10,00,000, and 10% debentures of ₹20,00,000. Compute the Operating Leverage (DOL), Financial Leverage (DFL), and Combined Leverage (DCL).

2. What is the Cash Inflow after Taxes for the Year 1, Year 2 and Year 3 of the investment proposal ?

4. What is the Net Present Value of the investment proposal?

2. What would be the Market Price per Share (MPS) of the company if Price Earnings Ratio (PE ratio) in Plan-1 is 12 times and Plan-II is 15 times?

3. What would be the financial Break Even Point (BEP) in Plan-I and Plan-II?

7. Current Assets and Current Liabilities would be:

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