A Firm Is Evaluating a Proposal Which Has an Initial

question 8

Multiple Choice

A firm is evaluating a proposal which has an initial investment of $50,000 and has cash flows of $15,000 per year for five years. The payback period of the project is ________.

• A) 1.5 years
• B) 2 years
• C) 3.3 years
• D) 4 years

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Definitions:

Sole Proprietorship

A type of business where a single individual owns, manages, and is responsible for all aspects of the business, including liabilities.

Non-Profit Organization

An organization dedicated to furthering a particular social cause or advocating for a shared point of interest, without aiming for profit.

Managing Partner

The partner in a law firm who makes decisions relating to the firm’s policies and procedures and who generally oversees the business operations of the firm.

Business Operations

Activities involved in the day-to-day functions of a business related to producing and delivering its products or services.