A Company with $800,000 in Operating Assets Is Considering the Purchase

question 177

Multiple Choice

A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year.The payback period for this machine in years is closest to which of the following? (Ignore income taxes in this problem.)

• A) 0.27 years.
• B) 3.75 years.
• C) 10.70 years.
• D) 40.00 years.

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Definitions:

Operational

Pertaining to the activities that form the day-to-day functions and processes of an organization.

E-Commerce

The buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

Creative Discussions

Conversations aimed at generating innovative ideas or solutions through collaborative thinking and open exchange of views.

Senior Managers

High-level executives responsible for overseeing the operations within an organization and making strategic decisions.