You Are Considering a Project with an Initial Cost of $4,300

question 74

Multiple Choice

You are considering a project with an initial cost of $4,300. What is the payback period for this project if the cash inflows are $550,$970,$2,600,and $500 a year over the next four years?

• A) 2.04 years
• B) 2.36 years
• C) 2.89 years
• D) 3.04 years
• E) 3.36 years

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Definitions:

Indirect Labor

Labor costs associated with support work that does not directly contribute to the production of goods or provision of services but is necessary for operations.

Direct Materials

Raw materials that can be directly traced to the production of specific goods or services.

Indirect Materials

Materials used in the production process that are not directly traceable to the finished product, such as lubricants and cleaning supplies used in machinery.

General Journal Entries

Written records of day-to-day financial transactions in a company's general ledger, specifying the date, accounts affected, amounts, and details of transactions.