Use the Information Below to Answer the Following Question(s)

question 145

Multiple Choice

Use the information below to answer the following question(s) .
Latimer Corporation is considering two alternative investment proposals with the following data:

-Brackett Corporation is adding a new product line that will require an investment of $120,000. The product line is estimated to generate cash inflows of $25,000 the first year, $23,000 the second year, and $18,000 each year thereafter for ten more years. What is the payback period?

• A) 4.80 years
• B) 6.00 years
• C) 6.32 years
• D) 6.67 years

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Definitions:

Quantum Meruit

A legal principle that means "as much as he deserves," used to determine fair compensation for services rendered without a specific contract.

Estoppel

A legal principle that prevents a person from arguing something contrary to a claim or a statement they have previously made and on which another party has relied.

Consideration

Something of value that is given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Charitable Pledges

Promises to donate a specific amount of money or resources to a charity or non-profit organization.