Logan,IncIs Evaluating Two Possible Investments in Depreciable Plant Assets Calculate the Payback Period for Investment A

question 119

Multiple Choice

Logan,Inc.is evaluating two possible investments in depreciable plant assets.The company uses the straight-line method of depreciation.The following information is available: $$\begin{array} { | l | r | r | } \hline & \text { Investment A } & \text { Investment B } \\\hline \text { Initial capital investment } & \$ 101,000 & \$ 151,000 \\\hline \text { Estimated useful life } & 10 \text { years } & 10 \text { years } \\\hline \text { Estimated residual value } & 0 & \$ 20,000 \\\hline \text { Estimated annual net cash inflow for 10 years } & \$ 28,000 & \$ 47,000 \\\hline \text { Required rate of return } & 12 \% & 12 \% \\\hline\end{array}$$ Calculate the payback period for Investment A.(Round your answer to two decimal places. )

• A)2.22 years
• B)2.89 years
• C)1.00 year
• D)3.61 years

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Union

An organized association of workers formed to protect and further their rights and interests; typically involved in labor negotiations and contracts.

Participation

The involvement of individuals or groups in decision-making processes that affect them.

Employment Flexibility

Refers to the adaptability of the workforce and employment conditions, allowing for changes in hours, location, and job duties.

Functional Flexibility

The ability of an organization to manage and utilize its workforce in a way that can quickly respond to changes without significant additional costs.