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Corporate Finance · Quiz 1 · 23 Feb 2025 · January 2025 term

Question 9: Consider the following three projects which have initial …

Question 9

+4 marksOne correct option

Consider the following three projects which have initial cost of Rs 5,000 today:
Project 1: It pays Rs 200 starting next year and pays the same amount for 50 years.
Project 2: It pays Rs 8,000 after five years from today. There are no interim payments. Project 3: It pays Rs 2000 next year and Rs 4000 two years from today.
Assume that the prevailing interest rate is 4%; which of the projects has the least payback period?

  1. A

    All three projects have the same payback period.

  2. B

    Project 1

  3. C

    Project 2

  4. D

    Project 3

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Correct answer

  • D

    Project 3

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Question 9 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 23 Feb 2025, in the January 2025 term (IIT M DEGREE AN EXAM QDB2 23 Feb 2025). It carries 4 marks.

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