In Order to Be Enforceable,a Covenant Not to Compete Must

question 25

Multiple Choice

In order to be enforceable,a covenant not to compete must be reasonable in each of the following aspects EXCEPT:

• A) length of time the restriction is in effect
• B) scope (i.e.,activities affected) of the restriction
• C) amount paid to the one who gives up the right to compete
• D) geographic area of the restriction

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Definitions:

Payback Period

The time it takes for an investment to generate enough cash flow to recover its initial cost, used in capital budgeting to evaluate investment efficiency.

Straight-Line Depreciation

A plan for breaking down the expense of a real asset across its viable life in steady annual segments.

Salvage Value

The anticipated earnings from an asset's sale following the cessation of its useful life.

Net Cash Flow

The variance between the cash entering and leaving a business over a given timeframe.