Discussion
A project with a first cost of 40 000 and receipts of 10 000 a year has a simple payback period of
Answer: B
Correct answer: 4 years
\[ \frac{40{,}000}{10{,}000} = 4\ \mathrm{years}. \] With uniform receipts the simple payback is a single division. Note what the figure ignores: no interest is charged on the money while it is out, and whatever happens after year four does not enter the calculation.
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