Welcher, Inc

question 8

Multiple Choice

Welcher, Inc.plans to purchase equipment with a cost of $142,500.The company expects annual net cash inflows from the equipment of $30,000.The equipment has an estimated life of 8 years, no estimated salvage life, and a required rate of return is 6%.The payback period for the equipment is closest to

• A)1 year.
• B)1.5 years.
• C)4.8 years.
• D)8 years.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Perfect Competition

Perfect competition describes a market structure where many firms sell identical products, no single buyer or seller can influence the market price, and there is free entry and exit of firms.

Firm Profits

The financial gains a company makes after deducting all its expenses.

Marginal Cost Curve

A graph that shows the change in the cost of producing one more unit of a good.