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:

Bureaucracy

A system of administration characterized by strict policies, procedures, and hierarchy, often within large organizations or governments.

Management Duties

The responsibilities held by individuals in managerial positions, including planning, organizing, leading, and controlling organizational resources to achieve specific goals.

Corrective Action

Measures taken to identify, eliminate, and prevent the recurrence of defects, errors, or issues in a process or product.

Total Product

The comprehensive output or result produced by a company, taking into account both tangible and intangible elements.