Neighbors Corporation Is Considering a Project That Would Require an Investment

question 105

Multiple Choice

Neighbors Corporation is considering a project that would require an investment of $279,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows: The scrap value of the project's assets at the end of the project would be $15,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

• A)2.0 years
• B)2.6 years
• C)2.5 years
• D)1.9 years

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Definitions:

Purchasing Power

The value of currency expressed in terms of the amount of goods or services that one unit of money can buy.

Income

The financial gain received by an individual or entity, typically expressed as revenue from work, investments, or business operations.

Population Segments

Specific groups within a larger population differentiated by characteristics like age, gender, income, etc., targeted by businesses for marketing.

Latchkey Children

Refers to children who return to an empty home after school or are left unsupervised for long periods because their parents are at work.