Mr J's Bagels Invested in a New Oven for $14,000

question 135

Multiple Choice

Mr. J's Bagels invested in a new oven for $14,000. The oven reduced the amount of time for baking which increased production and sales for five years by the following amounts of cash inflows: Using the averaging method, the payback period for the investment in the oven would be:
$$\begin{array} { | l | l | l | l | l | } \hline \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } & \text { Year 5 } \\\hline \$ 8,000 & \$ 6,000 & \$ 5,000 & \$ 6,000 & \$ 5,000 \\\hline\end{array}$$

• A)5.0 years.
• B)2.3 years.
• C)2.0 years.
• D)0.5 years.

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