- Exam Code: CIS-SIR
- Exam Name: Certified Implementation Specialist - Security Incident Response Exam
- Version: V15.95
- Q & A: 258 Questions and Answers
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NEW QUESTION: 1
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of
$30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10.
This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment?
A. 6.12 years
B. 4.86 years
C. 4.00 years
D. 5.23 years
E. 4.35 years
Using the even cash flow distribution assumption, the project will completely recover initial investment after
30/35 = 0.86 of Year 5:
Payback = 4 + 30/35 = 4.86 years.
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