Richol Corporation Is Considering an Investment in New Equipment Costing

question 118

Multiple Choice

Richol Corporation is considering an investment in new equipment costing $180,000.The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $45,000 the first year,$65,000 the second year,and $90,000 every year thereafter until the fifth year.What is the payback period for this investment? The equipment has no residual value.

• A)2.00 years
• B)2.37 years
• C)2.78 years
• D)4.00 years

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Definitions:

Utilitarian Influence

The impact of practical and functional benefits on consumer decision-making, emphasizing the utility and usefulness of a product or service.

Brand Evaluations

The process by which consumers assess a brand's value, quality, and relevance to their needs, influencing their purchasing decisions.

Buyer

A person or entity that purchases goods or services for personal use, resale, or as part of industrial processes.

Influencer

An individual with the power to affect the purchasing decisions of others due to their authority, knowledge, position, or relationship with their audience.