An Initial Investment of $180,000 Is Expected to Generate $100,000

question 39

Multiple Choice

An initial investment of $180,000 is expected to generate $100,000 in annual cost savings over the asset's expected 3-year life.Assume straight-line depreciation and ignore income taxes.The payback period is _____.

• A)3.0 years
• B)0.88 years
• C)1.80 years
• D)none of these answers is correct

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Definitions:

Supplies

Materials or items which are used in the operation of a business or needed in the production process.

Services

Economic activities that are intangible, are not stored, and do not result in ownership transfer from the service provider to the service receiver.

Double-Entry

An accounting principle where every transaction is entered twice, as a debit in one account and a credit in another, to keep the accounting equation balanced.

Accounting Equation

The fundamental principle of accounting that represents the relationship between assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity.