A Capital Budgeting Project Has a Net Investment of $550,000

question 8

Multiple Choice

A capital budgeting project has a net investment of $550,000 and is expected to generate net cash flows of $200,000 annually for 7 years. What is the payback period?

• A)5.5 years
• B)2.25 years
• C)2.55 years
• D)2.75 years

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Definitions:

Deductive Reasoning

A logical process where a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Ultimate Attribution Error

A bias in which positive behaviors by out-group members are attributed to situational factors, while negative behaviors are attributed to their character.

Group-Enhancing Bias

A cognitive bias that leads people to view their own group more favorably compared to others.

Group Production Blocking

A process during collaborative work where the flow of ideas or productivity is impeded because only one group member can contribute at a time.