A Company Is Considering the Purchase of a New Piece

question 59

Multiple Choice

A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual cash inflows from this investment are $36,000 (year 1) , $30,000 (year 2) , $18,000 (year 3) , $12,000 (year 4) and $6,000 (year 5) . The payback period is:

• A) 4.50 years.
• B) 4.25 years.
• C) 3.50 years.
• D) 3.00 years.
• E) 2.50 years.

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Definitions:

Enzymes

Biological molecules that significantly speed up the rate of virtually all of the chemical reactions within cells.

Anabolism

The constructive phase of metabolism in which cells synthesize complex molecules from simpler ones, such as proteins from amino acids.

Structural Proteins

Proteins that provide support and shape to cells and organisms, such as collagen in connective tissues and keratin in hair and nails.

Carbohydrate Utilization

The process by which the body uses carbohydrates as a source of energy, involving digestive breakdown and cellular metabolism.