Mystery Co

question 2

Multiple Choice

Mystery Co.is considering purchasing a new piece of equipment that will cost $600,000.The equipment has an estimated useful life of 8 years and no salvage value.The equipment will produce cash inflows of $215,000 per year and net income of $90,000 per year.Mystery requires a 10% rate of return.What is the payback period for this equipment?

• A)8.0 years
• B)3.75 years
• C)2.79 years
• D)6.67 years

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Definitions:

Sample Means

Sample Means are the averages calculated from a sample, used as estimates of the population mean.

Normally Distributed

A statistical distribution where data is symmetrically distributed around the mean, forming a bell-shaped curve.

Independent Samples

Samples in which the selection of individuals in one sample does not influence, or is not related to, the selection of individuals in another sample.

Selection Process

The method by which candidates are screened and selected for a position, task, or inclusion in a study, often involving steps like application, assessment, and interview.