Osprey Company Is Evaluating Two Possible Investments in Depreciable Plant

question 22

Multiple Choice

Osprey Company is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: How long is the payback period for Investment B?

• A)4)53 years
• B)5)00 years
• C)2)14 years
• D)10.71 years

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Definitions:

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Non-Cash Expenses

Expenses recorded on the income statement that do not involve an actual cash flow, such as depreciation and amortization.

Millions

A numeral representation indicating one thousand times one thousand, or 1,000,000.

Non-Cash Expenses

Expenses recorded on an income statement that do not involve a direct cash outflow, such as depreciation.