Heidi Company Is Considering the Acquisition of a Machine That

question 113

Multiple Choice

Heidi Company is considering the acquisition of a machine that costs $420,000.The machine is expected to have a useful life of 6 years,a negligible residual value,an annual net cash flow of $120,000,and annual operating income of $83,721.What is the estimated cash payback period for the machine?

• A) 3.5 years
• B) 5 years
• C) 5.1 years
• D) 4 years

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Definitions:

Off-price Retailers

Stores that sell brand-name and designer merchandise at prices lower than conventional retail stores, often overstock or out-of-season items.

Store Image

The perception or impression that consumers have of a retail store based on its atmosphere, quality of goods, level of service, and overall shopping experience.

Visual Merchandiser

A retail professional that develops layout plans and displays aimed at improving store sales by highlighting select items using visually appealing displays.

Assortment

The variety of products or services offered by a company or available in a market.