An Investment with an Initial Cost of $15,000 Produces Cash

question 28

Multiple Choice

An investment with an initial cost of $15,000 produces cash flows of $5,000 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) 3
• B) 3.2
• C) 3.75
• D) 4
• E) 5

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Definitions:

Journalize

The process of recording financial transactions in a company's journal, marking the first step in the accounting cycle.

Fiscal Year

A 12-month period that companies use for accounting purposes and preparing financial reports, which may or may not align with the calendar year.

Quick Ratio

A liquidity ratio that measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Assets

Resources owned or controlled by a business or individual, which are expected to produce future economic benefits.