An Investment Project That Requires a Present Investment of $210,000

question 4

Multiple Choice

An investment project that requires a present investment of $210,000 will have cash inflows of "R" dollars each year for the next five years.The project will terminate in five years.Consider the following statements (ignore income tax considerations) : I) If "R" is less than $42,000,the payback period exceeds the life of the project.
II) If "R" is greater than $42,000,the payback period exceeds the life of the project.
III) If "R" equals $42,000,the payback period equals the life of the project.
Which statement(s) is (are) true?

• A) Only I and II.
• B) Only I and III.
• C) Only II and III.
• D) I,II,and III.

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Definitions:

Assets

Assets represent resources owned or controlled by a business or individual that are expected to produce economic value or benefit in the future.

Total Assets Turnover Ratio

A measure of a firm's efficiency in using its assets to generate sales, calculated by dividing sales by total assets.

Sales

Sales encompass the transactions where goods or services are exchanged for money, representing the revenue generated by a business.

Total Assets

Total assets represent the sum of all assets owned by a company, including both current and non-current assets.