A Piece of Equipment Costs $30,000, and Is Expected to Generate

question 31

Multiple Choice

A piece of equipment costs $30,000, and is expected to generate $8,500 of annual cash revenues and $1,500 of annual cash expenses. The disposal value at the end of the estimated 10-year life is $3,000. Ignoring income taxes, the payback period is:

• A) 3.53 years.
• B) 3.86 years.
• C) 4.29 years.
• D) 6.98 years.
• E) some other period of time not noted.

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Definitions:

Practice Effect

A situation in which individuals improve their scores across test administrations as a result of increased familiarity and comfort with a test and the content that is being assessed.

Fatigue

A situation where clients tire from multiple administrations of a test and their performance decreases as they grow weary of the testing process.

Measurement Error

The difference between the actual value and the measured value due to limitations or inaccuracies in measurement tools or processes.

Test-Retest

A method of assessing the reliability of a test by administering the same test to the same subjects at two different points in time and comparing the scores.