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Your selection committee is debating between two projects. Project A has a payback period of 18 months. Project B has a cost of $125,000, with expected cash inflows of $50,000 the first year and $25,000 per quarter after that. Which project should you recommend?
Correct Answer: D
Project B has a payback period of 21 months; $50,000 is received in the first 12 months, with another $75,000 coming in over each of the next three quarters, or nine months.