Nestor Company Is Considering the Purchase of an Asset for $100,000

question 5

Multiple Choice

Nestor 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. $$\begin{array} { | l | l | l | } \hline & \begin{array} { c } \text { Annual Net } \\\text { Cash Flows }\end{array} & \begin{array} { c } \text { Present Value } \\\text { of } \$ 1 \text { at } \mathbf { 1 0 } \%\end{array} \\\hline \text { Year 0 } & & 1.0000 \\\hline \text { Year 1 } & \$ 40,000 & .9091 \\\hline \text { Year 2 } & \$ 40,000 & .8264 \\\hline \text { Year 3 } & \$ 35,000 & .7513 \\\hline \text { Year 4 } & \$ 35,000 & .6830 \\\hline \text { Year 5 } & \$ 30,000 & .6209 \\\hline\end{array}$$

• 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:

Participant Observation

A qualitative research method where the researcher immerses themselves in a group or setting to observe and participate in the activities being studied.

Ethnographers

Researchers who study human cultures by observing and often participating in the daily life of the communities they study.

Autoethnography

A form of participant observation where the feelings and actions of the researcher become a focal point of the ethnographic study.

Life History

An approach to interviewing that asks for a chronological account of the respondent’s entire life or some portion of it.