Nelson Corp

question 88

Multiple Choice

Nelson Corp.is considering the purchase of a new piece of equipment.The cost savings from the equipment would result in an annual increase in cash flow of $100,000.The equipment will have an initial cost of $400,000 and have a 5-year life.If the salvage value of the equipment is estimated to be $75,000,what is the payback period? Ignore income taxes.

• A)3.25 years
• B)4.00 years
• C)4.75 years
• D)7.00 years

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Definitions:

Sheetlike

Having a thin, broad shape resembling a sheet, often used to describe geological formations or layers.

Magma Chambers

Underground pools of molten rock located beneath the Earth's surface, which can feed volcanoes during eruptions.

Tectonic Settings

The environmental and geological conditions that relate to the movement and interaction of Earth's tectonic plates.

Continental Lithosphere

The solid outer layer of the earth that includes the crust and the uppermost mantle, specific to continents and characterized by its thickness and composition which differ from the oceanic lithosphere.