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

question 5

Multiple Choice

Use the information below to answer the following question(s) .
Boyle Company is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available:

-Richol Corporation is considering an investment in new equipment costing $180,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $90,000 every year thereafter until the fifth year. What is the payback period for this investment? The equipment has no residual value.

• A) 2.00 years
• B) 2.37 years
• C) 2.78 years
• D) 4.00 years

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Definitions:

Zone of Indifference

A concept referring to the range in which subordinates will accept and follow orders without resistance, based on their perception of the legitimacy of the command.

Enlarging

The process of increasing the scope, duties, or responsibilities of a job to provide greater variety and challenge.

Authority

The legitimate power or right to give orders, make decisions, and enforce obedience in a specific context or organization.

Power

The ability to influence another person.