Consider an Investment with an Initial Cost of $20,000 and Is

question 100

Multiple Choice

Consider an investment with an initial cost of $20,000 and is that expected to last for 5 years. The expected cash flows in years 1 and 2 are $5,000,in years 3 and 4 are $5,500 and in year 5 is $1,000. The total cash inflow is expected to be $22,000 or an average of $4,400 per year. Compute the payback period in years.

• A) 3.18 years
• B) 3.82 years
• C) 4.00 years
• D) 4.55 years
• E) None of these.

---

Definitions:

Service

An intangible act or use of expertise provided to meet the needs or wants of others, often in exchange for payment.

Small-batch Production

A manufacturing technique focused on producing small quantities of products, allowing for customization and flexibility.

Continuous-process Production

A manufacturing method where raw materials are processed in a continuous flow through various stages to produce finished products.

Mass Production

The manufacturing of large quantities of standardized products, often utilizing assembly line techniques.