(Ignore Income Taxes in This Problem

question 135

Multiple Choice

(Ignore income taxes in this problem.) The management of Gimenez Corporation is investigating an investment in equipment that would have a useful life of 7 years. The company uses a discount rate of 17% in its capital budgeting. Good estimates are available for the initial investment and the annual cash operating outflows, but not for the annual cash inflows and the salvage value of the equipment. The net present value of the initial investment and the annual cash outflows is -$274,265.
-Ignoring any salvage value,to the nearest whole dollar how large would the annual cash inflow have to be to make the investment in the equipment financially attractive?

• A)$39,181
• B)$274,265
• C)$46,625
• D)$69,930

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Definitions:

Median

In statistics, the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution.

Distribution

In statistics, the way in which values of a variable are spread or dispersed across a range, often visualized through a graph.

Variation

Variation refers to the differences or deviations seen within populations, individuals, or data points, often contributing to biodiversity and uniqueness.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution, aiming to provide an accurate description of the entire data set.