Use the Following Information for Questions

question 11

Multiple Choice

Use the following information for questions
A company is considering purchasing factory equipment that costs $400,000 and is estimated to have no salvage value at the end of its 5-year useful life.If the equipment is purchased, annual revenues are expected to be $150,000 and annual operating expenses exclusive of depreciation expense are expected to be $25,000.The straight-line method of depreciation would be used.
-The cash payback period on the equipment is

• A)8.89 years.
• B)5.0 years.
• C)3.2 years.
• D)2.67 years.

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Definitions:

Cross-hatching

An artistic technique used to create tonal or shading effects by drawing closely spaced parallel lines that may intersect with another set of parallel lines.

Columns

Structural elements in architecture that serve as support, or in writing, divisions of text in a page layout.

Clustered Bar Chart

A graphical representation where bars related to different categories are placed next to each other for comparison.

Monthly Sales Figures

Data reflecting the number of sales or the amount of revenue generated by a business within a month.