An Anticipated Purchase of Equipment for $520,000, with a Useful

question 51

Multiple Choice

An anticipated purchase of equipment for $520,000, with a useful life of 8 years and no residual value, is expected to yield the following annual incomes and net cash flows: The cash payback period for this equipment is

• A)5 years
• B)4 years
• C)6 years
• D)3 years

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Definitions:

Productive

Characterized by achieving significant results or output relative to the input or effort expended.

Total Asset Turnover

A financial ratio that measures the effectiveness of a company in utilizing its assets to generate sales or revenue.

Net Sales

The total revenue from goods or services sold by a company, after deducting returns, allowances for damaged goods, and discounts.

End-of-Year

A term that refers to the conclusion of a fiscal or calendar year, a time often used for accounting and inventory purposes.