The Net Initial Investment for a New Mainframe Computer Is

question 111

Multiple Choice

The net initial investment for a new mainframe computer is $2,000,000.Annual cash flows are expected to increase by $800,000 per year.The equipment has a 10-year useful life.What is the payback period?

• A)4.00 years
• B)2.50 years
• C)2.00 years
• D)1.75 years
• E)0.75 years

---

Definitions:

Plant Asset

Long-term physical assets used in the operation of a business that are not intended for resale, such as buildings, machinery, and equipment.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Inventions

Novel and unique creations or discoveries that are the result of human creativity and ingenuity.

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or age.