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

question 78

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: $$\begin{array} { | l | r | r | } \hline & \text { Investment A } & \text { Investment B } \\\hline \text { Initial capital investment } & \$ 102,000 & \$ 150,000 \\\hline \text { Estimated useful life } & 10 \text { years } & 10 \text { years } \\\hline \text { Estimated residual value } & 0 & \$ 23,000 \\\hline \text { Estimated annual net cash inflow for 10 years } & \$ 20,000 & \$ 46,000 \\\hline \text { Required rate of return } & 10 \% & 14 \% \\\hline\end{array}$$ Calculate the payback period for Investment A.(Round your answer to two decimal places.)

• A) 3.04 years
• B) 3.95 years
• C) 1.00 year
• D) 5.10 years

Understand the role of race as a social and political construct.

Acknowledge the harmful effects and consequences of racial categorization and genocide.

Dissect the misconceptions surrounding biological determinants of human capabilities and traits.

Understand the principles of correctly pricing stocks based on the Capital Asset Pricing Model (CAPM) and the security market line.

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Definitions:

Novation

Novation is the act of replacing one obligation with another by mutual agreement, effectively transferring the rights and duties to a new party.

Valid Obligation

A duty or commitment that is legally binding and enforceable by law.

Capital Investment

Funds spent by a company to acquire or upgrade physical assets, such as property, industrial buildings, or equipment, to improve its business capacity or efficiency.

Partnership Creditors

Individuals or entities to whom a partnership owes money or has some form of legal financial obligation.