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Can You Calculate the Payback Period for Gravel Galore's Expansion Project?

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Can You Calculate the Payback Period for Gravel Galore's Expansion Project?

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Questions and Answers

What is Gravel Galore?

A company owned by Josaf Mokele and Michale Molefi that provides building materials to the local people (correct)

A restaurant that specializes in seafood dishes.

A clothing store that sells designer items.

A tech company that creates mobile apps.

What are the project cash flows for the Piet Retief project?

Year 0: (200); Year 1: 40; Year 2: 60; Year 3: 80; Year 4: 100; Year 5: 120. (correct)

Year 0: (100); Year 1: 50; Year 2: 75; Year 3: 90; Year 4: 110; Year 5: 130.

Year 0: (250); Year 1: 30; Year 2: 50; Year 3: 70; Year 4: 90; Year 5: 110.

Year 0: (150); Year 1: 20; Year 2: 40; Year 3: 60; Year 4: 80; Year 5: 100.

What is the payback period for the Piet Retief project?

1.5 years

2.7 years

4.5 years

3.2 years

Study Notes

Gravel Galore is a company owned by Josaf Mokele and Michale Molefi.
They started 10 years ago to provide building materials to the local people.
They became successful and started to diversify into more types of material.
They are investigating opportunities to buy bigger land outside Piet Retief.
Discount rate is 9% and cost of capital is 12%.
Project cash flows: Year 0: (200); Year 1: 40; Year 2: 60; Year 3: 80; Year 4: 100; Year 5: 120.
The question asks to determine the payback period of the Piet Retief project.
Payback period is the time taken to recover the initial investment.
The options for payback period are 1.5, 2.7, 4.5, and 3.2 years.
The answer to the question is not provided.

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Description

Test your financial analysis skills by calculating the payback period for Gravel Galore's Piet Retief project. This quiz includes key information such as project cash flows, discount rate, and cost of capital. Can you determine the payback period and choose from the available options? Put your knowledge to the test and see if you have what it takes to analyze investment opportunities.