1. What is the payback period if:
a) the project investment is $750,000
b) the income for the first year is $50,000 per quarter
c) the income for the second year is $75,000 per quarter
d) the income for the third year is $75,000 per quarter
e) the cost of capital is 3%. State your answer in number of months.
2. You ask a team member for the duration of a particular task on the project. They provide three values: Optimistic, Expected and Pessimistic. Using the beta distribution, determine the value you'd put in your schedule. Use proper rounding rules to the nearest integer.
Optimistic = 25
Expected = 50
Pessimistic = 75