Consider the Following Ten-Year Project

question 24

Multiple Choice

Consider the following ten-year project.The initial after-tax outlay or after-tax cost is $1,500,000.The future after-tax cash inflows each year for years 1 through 10 are $400,000 per year.What is the payback period without discounting cash flows?

• A)10 years
• B)5 years
• C)3.75 years
• D)1.5 years

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Definitions:

Break-Even Analysis

Calculates the point at which revenues cover costs under different ‘what if’ conditions. The break‐even point is where revenues = costs.

'What-If' Scenarios

Analytical tools used to evaluate the potential outcomes of different decisions or events.

Total Quality Management

An organizational management philosophy aimed at embedding awareness of quality in all organizational processes.

Organisation-Wide Commitment

A collective dedication across all levels of an organization to achieve shared goals or missions, often requiring unified effort and collaboration.