Nestor Company Is Considering the Purchase of an Asset for $100,000

question 82

Multiple Choice

Nestor Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the
break-even time (BET) period for this investment.
$\begin{array}{rrr}&\text {Annual Net }&\text {Present Value}\\&\text {Cash Flows}&\text { of \( \$ 1 \) at \( 10 \% \) }\\\text { Year 0 } & & 1.0000\\\text { Year 1 } & \$ 40,000 &.9091 \\\text { Year 2 } & \$ 40,000 & .826 \\\text { Year 3 } & \$ 35,000 &.7513 \\\text { Year 4 } & \$ 35,000 &.6830 \\\text { Year 5 } & \$ 30,000 & .6209\end{array}$

• A) 2.98 years.
• B) 3.18 years.
• C) 3.62 years.
• D) 2.85 years.
• E) 2.57 years.

Apply and modify column formatting for balanced and aesthetic page layout.

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Definitions:

Tradable Permits

A system where rights to emit pollution or other substances are given a market value and can be bought and sold.

Environmental Protection Agency

A U.S. federal agency responsible for creating and enforcing regulations to protect the environment and public health from pollution and hazardous substances.

Clean Air

The condition of the atmosphere when it is free from pollutants, contaminants, and other harmful substances.

Network Externality

The effect that an additional user of a good or service has on the value of that product to others, often increasing the utility as more people use it.