An Investment Project Is Expected to Yield $12,000 in Annual

question 62

Multiple Choice

An investment project is expected to yield $12,000 in annual revenues,has $3,000 in fixed costs per year,and requires an initial investment of $6,000.Given a cost of goods sold of 50 percent of sales,what is the payback period in years?

• A)1.00
• B)1.50
• C)2.00
• D)4.00

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Definitions:

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically with predetermined dividend payments.

Dividends

Dividends are distributions of a portion of a company's earnings decided by the board of directors to its shareholders.

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as stated in its articles of incorporation.

Corporation

A legal entity separate from its owners, with its own rights and liabilities, capable of conducting business.