Wright Corp Is Considering the Purchase of a New Piece

question 92

Multiple Choice

Wright Corp is considering the purchase of a new piece of equipment,which would have an initial cost of $1,000,000 and a 5 year life.There is no salvage value for the equipment.The increase in net income each year of the equipment's life would be as follows: What is the payback period?

• A)1.77 years
• B)2.06 years
• C)2.96 years
• D)3.51 years

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Definitions:

Capital Account

The capital account in financial accounting represents where adjustments in assets and liabilities are recorded, correlating to transactions involving investments or loans.

Liquidating Partnership

A process where a partnership ends its operations, sells off its assets, and pays its liabilities, distributing the remaining assets to the partners based on their share in the partnership.

Insolvent

A financial state where an entity cannot meet its financial obligations as they come due.

Personal Creditors

Individuals or entities to whom a person owes money, as opposed to business or corporate creditors.