If a Business Promises to Pay All of Its Employees

question 40

Multiple Choice

If a business promises to pay all of its employees $500 to quit smoking, such an arrangement is a(n)

• A) valid, binding contract.
• B) obligation.
• C) commitment.
• D) gratuitous promise.
• E) quantum meruit.

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Definitions:

Salvage Value

The projected amount an asset is expected to generate when it is sold after its period of utility has ended.

Operating Costs

Expenses related to the day-to-day operations of a business, including rent, utilities, and salaries.

Useful Life

The expected period over which an asset is anticipated to be productive or beneficial for its owner.

Payback Period

The duration required for an investment to produce sufficient cash flow to recoup its original expense.