CTHE ACTUAL PAYBACK PERIOD IS BETWEEN TWO YEARS AND THREE YEARS. IT IS...

4. Answer: c

The actual payback period is between two years and three years. It is the point

where the net or cumulative cash flows equal zero. This occurs between year 2

and 3 and is 2 and 29/30 of a year from the first cash flow. Cumulative cash

flow in years are: 1, 500,000; 2, 290,000; 3, 10,000.