CORRECT ANSWER D. QUANT’S PAYBACK PERIOD IS 3.7 YEARS AS SHOWN...

345.

Correct answer d. Quant’s payback period is 3.7 years as shown below.

After-tax cash flow

Investment less cash flow

Year 1

$60,000 x .6 = $36,000

$104,000

Year 2

$60,000 x .6 = $36,000

68,000

Year 3

$60,000 x .6 = $36,000

32,000

Year 4

$80,000 x .6 = $48,000

$32,000 ÷ $48,000 = .667

Payback period = 3.7 years