An Investment with an Initial Cost of $14,000 Produces Cash

question 98

Multiple Choice

An investment with an initial cost of $14,000 produces cash flows of $4,000 annually for 5 years. If the cash flow is evenly spread out over the year and the firm can borrow at 10%,the discounted payback period is _____ years.

• A) 2.5
• B) 2.68
• C) 4.53
• D) 4.87
• E) Never

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Definitions:

Capacity Allocation

Capacity allocation refers to the process of distributing available resources or capacity among various products, services, tasks, or activities.

Responsiveness

The ability of a company or system to rapidly respond to changes in demand or market conditions.

Demand Satisfaction

The degree to which the needs and desires of customers for a product or service are met by a company.

Over-Capacity

The condition of having more production or service capacity than currently needed, which can lead to inefficiencies, increased costs, and downward pressure on prices.