Assume a $6,500 Investment and the Following Cash Flows for Two

question 29

Multiple Choice

Assume a $6,500 investment and the following cash flows for two alternatives. Under the payback method, which of the following could be concluded?

• A) Investment X should be selected.
• B) Investment Y should be selected.
• C) Investment X and Y provide the same payback period.
• D) The investments are not comparable since they have different time frames.

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Definitions:

Marginal Subcontracting Cost

The additional cost incurred for each additional unit of production that is subcontracted rather than produced in-house.

Layoff Cost

The expenses associated with reducing an organization's workforce, encompassing severance pay, benefits continuation, and potential legal costs.

Hiring And Training Cost

Expenses associated with recruiting new employees and providing them with the necessary skills and knowledge for their role.

Labor Hours

The total number of hours worked by employees, used as a measure of labor input in the production of goods and services.