Eagle Company Is Considering the Purchase of an Asset for $100,000.It

question 91

Multiple Choice

Eagle Company is considering the purchase of an asset for $100,000.It is expected to produce the following net cash flows.The cash flows occur evenly throughout each year.Compute the break-even time (BET) period for this investment.(Round to two decimal places.) $$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { Annual Net } \\\text { Cash Flaws }\end{array} & \begin{array} { c } \text { Present Value } \\\text { of 1 at 10\% }\end{array} \\\hline \text { Year 0 } & & 1.0000 \\\hline \text { Year 1 } & \$ 40,000 & .9091 \\\hline \text { Year 2 } & \$ 40,000 & .8264 \\\hline \text { Year 3 } & \$ 35,000 & .7513 \\\hline \text { Year 4 } & \$ 35,000 & .6830 \\\hline \text { Year 5 } & \$ 30,000 & .6209 \\\hline\end{array}$$

• A)2.85 years.
• B)2.57 years.
• C)3.17 years.
• D)2.98 years.
• E)3.62 years.

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Definitions:

Problem Solving

The process of identifying a problem, developing possible solutions, and choosing and implementing the best solution.

Cognitive Development

Refers to the growth and change in a person's ability to think, reason, and understand over time.

Piaget

A reference to Jean Piaget, a Swiss psychologist known for his pioneering work in the field of cognitive development in children.

Formal Operations

The final stage in Piaget's theory of cognitive development, starting around age 12, where individuals develop the ability to think abstractly and logically.