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:

Dishonest Conduct

Actions that are deceitful, fraudulent, or lack integrity, often intended to gain an unfair advantage.

Just Cause

A valid reason to dismiss an employee without notice.

Summary Dismissal

A legal action resulting in the immediate termination of an employee or ending of a contract without notice, due to a breach or misconduct.

Termination

The act of ending something, such as a contractual agreement, employment, or service, either by mutual agreement or through a unilateral decision.