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The director of capital budgeting for Ascension Health System, Inc. has estimated the following cash flows for a new service and has a cost of

The director of capital budgeting for Ascension Health System, Inc. has estimated the following cash flows for a new service and has a cost of capital of 11%. What is the projects payback period?

Year Annual Cash Flows

0 $ (150,000) 1 $ 80,000 2 $ 60,000 3 $ 40,000

Choice: 1.2 years Choice: Not enough information to tell Choice: 2.17 years Choice: 3.4 years

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