A Company Is Evaluating an Investment Proposal Using the Payback

question 6

Multiple Choice

A company is evaluating an investment proposal using the payback method.Cash inflows are expected to be $16 000 in year 1,$12 000 in year 2 and $8000 in year 3.The initial investment required is $32 000.Assuming even cash inflows within each year the payback period is:

• A)2 years
• B)2.25 years
• C)2.5 years
• D)2.6 years

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Definitions:

Radioisotope

Isotope with an unstable nucleus.

Radiometric Dating

A technique used to date materials such as rocks or carbon, by measuring the decay rate of radioactive isotopes contained within those materials.

K-Pg Boundary

A geological signature marking the transition between the Cretaceous (K) and Paleogene (Pg) periods, approximately 66 million years ago, associated with the mass extinction event that included the demise of the dinosaurs.

Cretaceous Period

A geological period from about 145 to 66 million years ago, known for being the last portion of the age of dinosaurs.