Commercial Pilot Licence (CPAER) – Canada · Question
A Canadian company is considering purchasing a new machine with an initial cost of $500,000. It is expected to generate annual net cash flows of $150,000 for five years. The company's required rate of return is 10%. What is the payback period for this project?
The payback period is calculated as Initial Investment / Annual Net Cash Flow. For this project, $500,000 / $150,000 = 3.33 years.
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Question: A Canadian company is considering purchasing a new machine with an initial cost of $500,000. It is expected to generate annual net cash flows of $150,000 for five years. The company's required rate of return is 10%. What is the payback period for this project?
Answer options: ✅ 3.33 years.
- 3.00 years.
- 3.50 years.
- 4.00 years.
Correct answer: 3.33 years.
Explanation: The payback period is calculated as Initial Investment / Annual Net Cash Flow. For this project, $500,000 / $150,000 = 3.33 years.
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Question explanations
- What is the minimum visibility required for a commercial VFR flight in Class D airspace at or below 3,000 feet
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