Latimer Corporation Is Considering Two Alternative Investment Proposals with the Following

question 88

Multiple Choice

Latimer Corporation is considering two alternative investment proposals with the following data: $\begin{array}{|l|r|r|}\hline & \text { Proposal X } & \text { Proposal Y } \\\hline \text { Investment } & \$ 812,500 & \$ 390,000 \\\hline \text { Useful life } & 8 \text { years } & 8 \text { years } \\\hline \begin{array}{l}\text { Estimated annual net } \\\text { cash inflows for 8 years }\end{array} & \$ 125,000 & \$ 78,000 \\\hline \text { Residual value } & \$ 40,000 & \$ \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 14 \% & 10 \% \\\hline\end{array}$


-How long is the payback period for Proposal Y?

• A)20.31 years
• B)9.75 years
• C)6.50 years
• D)5.00 years

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Definitions:

Ambiguity

Refers to the quality of being open to more than one interpretation; lack of definiteness or certainty.

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The channel or method through which information is transmitted from sender to receiver, such as text, speech, video, or digital platforms.

Transmitters

Devices or entities that send or transmit signals, information, or messages across distances for communication purposes.

Receptors

Biological structures or substances that receive and respond to chemical signals in an organism, playing a crucial role in various processes including sensory perception and neurotransmission.