Vinson Manufacturing Requires All Capital Investment Projects to Have a Payback

question 69

Multiple Choice

Vinson Manufacturing requires all capital investment projects to have a payback period of 5 years or less.Vinson is currently considering an equipment purchase that has an initial cost of $90 000.The equipment is expected to have a 10-year life and a salvage value of $5000.Assuming cash flows are equal,what does the annual cash flow generated by the equipment need to be in order to meet the payback period requirements?

• A) $18 000
• B) $19 000
• C) $17 000
• D) $ 9000

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Definitions:

Expectancy Theory

A theory in psychology that explains the motivational strength as being determined by the perceived likelihood of success and the value of the outcome.

Job Design

The process of organizing tasks, duties, and responsibilities into a productive unit of work to enhance job satisfaction and performance.

Goals

Targets or objectives that an individual, team, or organization aims to achieve within a specified timeframe.

Goal-Setting Theory

A theory positing that establishing clear, challenging, and attainable goals can significantly enhance motivation and performance.