Use the Table for the Question(s)below

question 27

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows:

-Assume the appropriate discount rate for this project is 15%. The payback period for this project is closest to:

• A)2
• B)4
• C)2.5

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Definitions:

Break-even Point

The level of production or sales at which total costs equal total revenues, resulting in no profit or loss.

Fixed Costs

Costs that are constant regardless of the volume of goods or services produced by a company, including lease payments and maintenance expenditures.

Variable Costs

Disbursements that are contingent upon the magnitude of production or sales transactions.

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, contributing to covering fixed costs and generating profit.