A company invests $40,000 in a project with the following net cash flows:

Year 1: $3,000

Year 2: $8,000

Year 3: $14,000

Year 4: $19,000

Year 5: $22,000

Year 6: $28,000

In what year does payback occur?

Year 5

Year 4

Year 6

Year 3

Which of the following describes the securities underwriting process?

• a) An investment bank helps to connect a private company with sources of capital.

• b) An investment bank determines if a company can afford to go public.

• c) An investment bank responsible for market liquidity quotes a bid price and an ask price for a security.

• d) A company sells its securities to an investment bank, who then sells the securities to market participants.