Suppose the Cash Flows of a Project Are Received Evenly

question 78

Multiple Choice

Suppose the cash flows of a project are received evenly over the life of the project. What formula is used to calculate the payback period?

• A) original investment / annual cash flow
• B) original investment × annual cash flow
• C) original investment + annual cash flow
• D) original investment - annual cash flow

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Stockholders' Equity

The portion of a company's capital that belongs to the shareholders, calculated as the total assets of a company minus its total liabilities.

Average Inventory

An accounting measure that calculates the average value of inventory over a certain period of time to help assess inventory levels.

Buying Habits

Patterns or tendencies consumers exhibit when purchasing goods or services, including frequency, timing, and preference.