Services United Is Considering a New Project That Requires an Initial

question 27

Multiple Choice

Services United is considering a new project that requires an initial cash investment of $75,000. The project will generate cash inflows of $26,500, $32,700, $18,500, and $10,000 over each of the next four years, respectively. How long will it take to recover the initial investment?

• A) 2.74 years
• B) 2.85 years
• C) 2.99 years
• D) 3.27 years
• E) 3.68 years

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Definitions:

Reorder Point

The level of inventory which triggers an action to replenish that particular inventory stock.

Inventory Order

The process of ordering additional products or materials to replenish stock levels in anticipation of demand or to maintain inventory at desired levels.

Economic Order Point

The ideal quantity of inventory a company should order to minimize costs, including holding and shortage costs.

Credit Period

The duration during which a buyer can pay for goods or services received without incurring interest charges, often used in trade credit arrangements.