A Company Is Evaluating 3 Possible Investments

question 29

Multiple Choice

A company is evaluating 3 possible investments. Each uses straight-line depreciation. See data below: What is the payback period for Project C?

• A)3.5 years
• B)2.5 years
• C)2.4 years
• D)3.0 years

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Definitions:

Input

A resource or component used in the production process to produce goods and services.

Production Function

A production function is a mathematical model that describes the relationship between inputs used in production (like labor and capital) and the output produced.

Profit

The financial gain achieved when the revenues obtained from business activities exceed the expenses, costs, and taxes associated with maintaining the activity.

Commodity

A primary item used in trading that is replaceable with other items of the same type.