Suppose You Have Put $5,000 into a Project That Should

question 63

Multiple Choice

Suppose you have put $5,000 into a project that should generate cash inflows of $1,250 for each of the next 5 years.How long will it take to recover your initial investment?

• A) 3 years
• B) 3.5 years
• C) 4 years
• D) 4.2 years

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Definitions:

Externality

A side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices.

National Defense

Governmental and military actions and policies aimed at protecting a country from external aggression, threats, and maintaining national security.

Patented Invention

A unique product or process that has been legally protected by a patent to give its inventor exclusive rights to use, make, or sell it for a certain period of time.

Tornado Siren

A warning system used in many communities to alert citizens about the imminent danger of a tornado.