Paramount Carpets Is Considering Purchasing New Equipment Costing $736,000

question 91

Multiple Choice

Paramount Carpets is considering purchasing new equipment costing $736,000.The company's management has estimated that the equipment will generate cash flows as follows:

Considering the residual value is zero,calculate the payback period.(Round your answer to two decimal places. )

• A)4.39 years
• B)3.15 years
• C)3.62 years
• D)3.81 years

---

Definitions:

Standard Error

The standard deviation of the sampling distribution of a statistic, typically the mean, indicating the variability of an estimate.

Mean

The mean is the average of a set of numbers, calculated by adding them all together and then dividing by the count of those numbers.

Z-statistic

A statistical metric that measures the number of standard deviations a data point is from the mean, used in hypothesis testing.

Z-test

A statistical assessment employed to ascertain if there's a difference between the means of two populations when variances are recognized and the sample size is substantial.