Mr J's Bagels Invested in a New Oven for $14,000

question 89

Multiple Choice

Mr. J's Bagels invested in a new oven for $14,000. The oven reduced the amount of time for baking which increased production and sales for five years by the following amounts of cash inflows: $\begin{array}{ccccc}\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } & \text { Year 5 } \\\$ 8,000 & \$ 6,000 & \$ 5,000 & \$ 6,000 & \$ 5,000\end{array}$ Using the averaging method, the payback period for the investment in the oven would be:

• A) 5.0 years.
• B) 2.3 years.
• C) 2.0 years.
• D) 0.5 years.

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Definitions:

Refundable

Describes money that can be returned to the payer, often seen in tax credits or deposits that can be reclaimed under specific conditions.

Financial Statements

Documents outlining the financial activities and condition of a business, organization, or individual, typically including the balance sheet, income statement, and cash flow statement.

Asset Revaluation

The process of adjusting the book value of a company's assets to reflect their current fair market values.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.