Gator Manufacturing Is Considering the Purchase of Equipment at a Cost

question 36

Short Answer

Gator Manufacturing is considering the purchase of equipment at a cost of $7,000. Gator expects the equipment to generate cash inflows of $2,000 each year for the next ten years. The payback period for the equipment is: a. 35%.
B) 285%.
C) 3.5 years.
D) 2.85 years.
E) 10 years.

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Definitions:

Reinstated Account

An account previously closed or inactivated that has been restored to active status.

Uncollectible Receivables

Debts that are deemed unrecoverable by a company after exhaustive attempts to collect them, often written off as an expense.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Net Realizable Value

The estimated selling price of inventory in the ordinary course of business minus any costs for completion, disposal, and transportation.