An Investment of $42,000 Is Expected to Generate the Following

question 37

Multiple Choice

An investment of $42,000 is expected to generate the following annual cash flows:
$\begin{array}{ll}\text { Year 1 } & \$ 10,000 \\\text { Year 2 } & \$ 15,000 \\\text { Year 3 } & \$ 15,000 \\\text { Year 4 } & \$ 12,000\end{array}$
Assume straight-line depreciation is used.Ignore income taxes.What is the payback period?

• A) 3 years
• B) 3.17 years
• C) 3.83 years
• D) 4 years

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Definitions:

Time Compression

Strategies or processes aimed at reducing the time taken to complete tasks or deliver goods, thereby increasing efficiency and competitive advantage.

Computer Simulation

The use of software to create a virtual model of a real-world system or process to study its behavior under various conditions.

Random Number Intervals

Ranges generated through a stochastic process, used in simulations and statistical sampling to represent uncertain outcomes.

Random Numbers

Numbers generated in a sequence such that each number's appearance is without pattern and unpredictable, often used in statistical sampling and computer simulations.