(Ignore Income Taxes in This Problem

question 94

Multiple Choice

(Ignore income taxes in this problem. ) Chee Corporation has gathered the following data on a proposed investment project: The company uses straight-line depreciation.Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is closest to:

• A)0.2 years
• B)2.5 years
• C)4.8 years
• D)5.0 years

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Definitions:

Allowance

A reduction from the gross amount of an asset to recognize a reduction in its value.

Bad Debt Expense

An expense reported on the income statement, representing the estimated amount of receivables that a company does not expect to collect.

Receivable

Money owed to a company by its customers or other parties for goods or services that have been delivered or used but not yet paid for.

Year of Sale

The specific calendar year in which a sale transaction of goods, services, or assets is completed.