You Are Considering a Project with an Initial Cost of $7,500.What

question 68

Multiple Choice

You are considering a project with an initial cost of $7,500.What is the payback period for this project if the cash inflows are $1,100,$1,640,$3,800,and $4,500 a year over the next four years,respectively?

• A)3.21 years
• B)3.28 years
• C)3.36 years
• D)4.21 years
• E)4.29 years

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Definitions:

Reorder Points

The inventory level at which a new order should be placed to replenish stock before it runs out, avoiding stockouts and production delays.

Carrying Costs

The complete expense associated with keeping inventory, encompassing storage fees, insurance, and the cost of missed opportunities.

Safety Stocks

Extra inventory kept to prevent stockouts and ensure adequate supply in the face of demand or supply variability.

Restocking Costs

Expenses associated with replenishing inventory, including purchasing, shipping, and handling costs.