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