Evaristo Corporation Is Considering an Investment in Equipment for $45,000

question 79

Multiple Choice

Evaristo Corporation is considering an investment in equipment for $45,000. Data related to the investment are as follows: $$\begin{array}{l}\begin{array} { c c } &\text { Cash Flow before }\\\text { Year } & \text { Depreciation and Taxes } \\\hline 1 & \$ 30,000 \\2 & 30,000 \\3 & 30,000 \\4 & 30,000 \\5 & 30,000\end{array}\end{array}$$ Cost of capital is 18 percent. Evaristo uses the straight-line method of depreciation with no mid-year convention. In addition, its tax rate is 40 percent, and the life of the equipment is five years with no salvage value. What is the payback period in years approximated to two decimal points?

• A)1.00
• B)0.67
• C)1.50
• D)2.08

---

Definitions:

Own Emotions

The personal emotional responses and feelings that an individual recognizes and manages.

Salesforce Training

The process of providing sales teams with the education and skills necessary to effectively sell products or services and achieve sales objectives.

Training

The process of teaching or learning skills and knowledge, often to improve performance in a specific area or job.

Compensation Plan

A structured policy designed to reward employees for their contributions to an organization, including salaries, bonuses, and benefits.