Azimuth Company Was Considering the Purchase of Equipment What Is the Payback Period in Years, Assuming No Taxes

question 64

Multiple Choice

Azimuth Company was considering the purchase of equipment. Details on the equipment are as follows: $$\begin{array} { c c r } \text { Year } & \text { Original Investment } & \text { Cash Flow } \\{ 0 } & \$ 200,000 \\1 & &\$ 40,000 \\2 & & 40,000 \\3 & & 60,000 \\4 & & 40,000 \\5 & & 60,000 \\6 & & 30,000\end{array}$$ What is the payback period in years, assuming no taxes are paid?

• A)4.33
• B)4.00
• C)5.00
• D)3.85

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Definitions:

Sponsor

An individual or organization that provides funds for a project or activity carried out by another, in exchange for advertising or promotion.

Nash Equilibrium

A concept in game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged, representing a state of optimal strategy among all participants.

Mixed Strategies

In game theory, strategies involving randomizing choices to make opponents indifferent between their own possible actions.

Maximin Strategy

Strategy that maximizes the minimum gain that can be earned.