ABC Company Is Adding a New Product Line That Will

question 91

Multiple Choice

ABC Company is adding a new product line that will require an investment of $1,500,000. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. What is the payback period?

• A) 2.73 years
• B) 6.00 years
• C) 6.75 years
• D) 7.25 years

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Definitions:

Molecular Oxygen

A diatomic molecule made up of two oxygen atoms, essential for processes such as respiration in aerobic organisms.

Hemoglobin

An iron-containing protein in red blood cells that transports oxygen from the lungs to the tissues and carbon dioxide back to the lungs.

Pulmonary Emphysema

A lung condition that causes shortness of breath due to over-inflation of the air sacs in the lungs.

Alveoli

Tiny air sacs in the lungs where gas exchange occurs, allowing oxygen to enter the blood and carbon dioxide to be expelled.