You Have Saved $1,250 for a Used Motorcycle That Has

question 41

Multiple Choice

You have saved $1,250 for a used motorcycle that has a current price of $1,550.If your money is sitting in an account earning 2.25% per year,how long will it take for this account to grow to $1,550? Note: The motorcycle's price may have changed by the time your account reaches a value of $1,550.

• A)9.04 months
• B)9.67 years
• C)9.04 years
• D)9.67 months

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Definitions:

Payback Period

A financial metric that calculates the time required for an investment to generate cash flows sufficient to recover the initial investment cost.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or services, integral to the finished product.

Direct Labor

The labor costs directly associated with the production of goods or services, including wages of workers who are directly involved in manufacturing.

Net Cash Inflows

The difference between all cash inflows and outflows within a given period, indicating a company's ability to generate cash.