Nouvel an S

question 44

Multiple Choice

Nouvel An S.A. is considering a project that requires an initial investment of $51,000. It is expected to produce annual cash flows of $35,000, $25,000 and $15,000. What is the discounted payback period for this project if the discount rate is 12%?

• A) approximately 1 year.
• B) approximately 1.6 years.
• C) approximately 2 years.
• D) The project will never reach discounted payback.

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Definitions:

Make-to-order

A production strategy where manufacturing starts only after a customer's order is received, allowing for customization of products but potentially leading to longer lead times.

Make-to-stock

A production strategy where items are manufactured for stock based on demand forecasts, rather than being custom made to order.

Fulfillment

The process of completing an order or obligation, especially in the context of preparing and delivering goods to customers.

Production

The process of creating, manufacturing, or enhancing products or services.