McGlothin Inc $\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$

question 102

Multiple Choice

McGlothin Inc. is considering a project that has the following cash flow data. What is the project's payback?
$\begin{array} { l c c c c } \text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 1,150 & \$ 500 & \$ 500 & \$ 500\end{array}$

• A) 1.86 years
• B) 2.07 years
• C) 2.30 years
• D) 2.53 years
• E) 2.78 years

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Definitions:

Purely Competitive

A purely competitive market is one in which there are many buyers and sellers, all trading homogeneous products, with no single entity able to control the market price.

Market

A virtual or physical place where buyers and sellers come together to trade goods, services, or financial instruments.

Allocative Efficiency

A state of the economy in which resources are allocated in a way that maximizes the overall benefit to society, with goods and services produced at their highest-valued uses.

Purely Competitive

A market format where numerous small companies offer an identical product with no barriers to entering or leaving the market, resulting in firms accepting the market price as given.