A Company with $500,000 in Operating Assets Is Considering the Purchase

question 365

Multiple Choice

A company with $500,000 in operating assets is considering the purchase of a machine that costs $60,000 and which is expected to reduce operating costs by $15,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.) :

• A) 0.25 years
• B) 8.3 years
• C) 4 years
• D) 33.3 years

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Definitions:

Percentage Points

A unit for the difference of two percentages, reflecting the absolute difference between them.

Variance

A measure of the dispersion of a set of data points around their mean value.

Population Proportion Variances

The measure of variability or dispersion of proportion values in a population, indicating how much individual proportions deviate from the average population proportion.

Senatorial Election

An electoral process in which voters select candidates to serve as Senators in a legislative body, such as the United States Senate.