Zed Corporation Is Evaluating the Purchase of a Machine That

question 70

Multiple Choice

Zed Corporation is evaluating the purchase of a machine that costs $275,000.The annual cash revenues from the machine would be $50,000, and the annual cash expenses of the machine would be $10,000.What is the estimated cash payback period for the machine?

• A) 8.5 years
• B) 3.8 years
• C) 6.9 years
• D) 5.2 years

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Definitions:

Voidable Contract

A contract that may be annulled or considered void at the option of one of the parties due to certain defects or circumstances affecting the contract's validity.

Quantum Meruit

A legal principle that determines the amount to be paid for services when no contract exists or when contractual terms are ambiguous.

Agreement

A mutual understanding or arrangement between two or more parties, detailing the terms and conditions for their particular course of action.

Consideration

Something of value exchanged between parties in a contract, which is necessary for the agreement to be legally binding.