An Investment That Costs $120,000 Is Estimated to Reduce Cash

question 49

Multiple Choice

An investment that costs $120,000 is estimated to reduce cash operating costs by $40,000 per year for 4 years.The required rate of return is 10 percent.Determine the payback period assuming an inflation rate of 8 percent on the operating costs saved.

• A)About 2.79 years
• B)About 2.92 years
• C)About 2.66 years
• D)About 3 years

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Definitions:

Medication

Substances used to diagnose, treat, or prevent disease and alleviate symptoms, typically used in medical treatment.

Transactional Analysis

A psychotherapeutic theory and method exploring the interactions (transactions) between individuals based on the ego states of Parent, Adult, and Child.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors.

Ego States

Refers to the different facets of our personality that manifest in our behaviors and interactions, such as the Parent, Adult, and Child in transactional analysis.