If the Initial Investment Is a Project Is $100,000 and the Expected

question 58

Multiple Choice

If the initial investment is a project is $100,000 and the expected annual net profit for the project is $20,000, the payback period is:

• A) One fifth of a year
• B) 4 years
• C) 5 years
• D) 10 years
• E) Insufficient information to determine the payback period

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Definitions:

Contract Rate

The agreed-upon price or rate specified in a contract for services or goods, often locked in for the duration of the agreement.

Issue Price

The price at which securities, such as bonds or shares, are originally sold to the public or investors by the issuing entity.

Installment Note Payable

A debt instrument that requires a series of periodic payments to the lender over a specified period of time.

Interest Expense

The expenditure an entity incurs from borrowing funds during a certain period.