GuSont Inc Assume That Cash Inflows Occur Evenly Throughout the Year

question 38

Multiple Choice

GuSont Inc. was considering an investment in the following project: $\begin{array}{lrr}\text { Required initial investment } & \$ 990,000 \\\text { Net annual after-tax cash inflow } & \$ 165,000 \\\text { Annual depreciation expense }(\$ 990,000-\$ 165,000) / 15 \text { years } & \$ 55,000 \\\text { Estimated salvage value } & \$ 165,000 \\\text { Life of the project in years } & 15\end{array}$ Assume that cash inflows occur evenly throughout the year. The estimated payback period in years (rounded to one decimal place) for the proposed project is:

• A) 3.7 years.
• B) 4.6 years.
• C) 5.8 years.
• D) 6.0 years.
• E) 7.9 years.

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Definitions:

Accurately

With precision and correctness, without errors or distortions.

Detecting

The process of discovering or identifying the presence of something, especially with the assistance of specialized techniques or equipment.

Basic Sensations

The simplest form of sensory processing, resulting from stimulating sensory receptors in the eyes, ears, skin, nose, and tongue.

Sense of Touch

One of the five senses that allows an organism to perceive and respond to tactile stimuli from the environment.