A Firm Is Evaluating a Proposal Which Has an Initial

question 3

Multiple Choice

A firm is evaluating a proposal which has an initial investment of €35,000 and has cash flows of €10,000 in year 1, €20,000 in year 2, and €10,000 in year 3. The payback period of the project is

• A) between two and three years.
• B) one year.
• C) two years.
• D) between one and two years.

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Definitions:

Federal Unemployment Tax

This is a tax paid by employers based on the wages paid to employees, intended to fund state workforce agencies.

Employer's Payroll Tax

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes in the United States.

Unemployment Taxes

Taxes paid by employers to fund unemployment insurance programs, providing benefits to workers who have lost their jobs.

Payroll Tax Expense

Financial charges imposed on employers based on the wages and salaries paid to employees.