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Corporate Finance · Quiz 1 · 27 Oct 2024 · September 2024 term

Question 22: Consider the following three projects which have initial…

Question 22

+4 marksOne correct option

Consider the following three projects which have initial cost of Rs 1000 today:
Project 1: It pays out Rs. 500 next year and Rs 1000 two years from today.
Project 2: It pays Rs. 100 starting next year and pays the same amount for 50 years.
Project 3: It pays Rs. 4000 five years from today. There are no interim payments.
Assume that the prevailing interest rate is 5%. Which project has the least payback period?

  1. A

    Project 1

  2. B

    Project 2

  3. C

    Project 3

  4. D

    All three projects have same payback period.

Show answer

Correct answer

  • A

    Project 1

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Question 22 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 27 Oct 2024, in the September 2024 term (IIT M DEGREE AN EXAM QDB2 27 Oct 2024). It carries 4 marks.

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