1. A firm is evaluating a potential investment that is expected to generate cash flows of $100 in years 1 thru 4 and $400 in years 5 thru 7. The initial investment is $750. What is the payback for this investment ?
2. The average accounting return method
A. ignores some project years.
B. ignores the timing of net income.
C. properly discounts all values.
D. is preferred by financial analysts over the alternative methods.
E. is never used in practice.