Sara Flea Collar Inc

question 60

Multiple Choice

Sara Flea Collar Inc.is evaluating an overseas expansion that will cost $1 million and is expected to generate the following cash flows: year 1: -$250,000; year 2: +$450,000; year 3: +$550,000; and year 4: +$800,000.What is the payback period?

• A) 3.00 years
• B) 3.13 years
• C) 3.31 years
• D) 3.75 years
• E) 4.00 years

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Definitions:

Tax Receipts

The total amount of tax revenue collected by a government from individuals and businesses.

Automatic Stabilizer

Economic policies and programs designed to automatically reduce fluctuations in an economy's output, such as progressive taxation and welfare.

Tax Collections

The process by which government entities gather money from individuals and businesses in the form of taxes to fund public expenses.

Federal Budget Deficits

Refers to the shortfall when a government's expenditures exceed its revenues in a given fiscal year.