Question
Are you available on 10/14 to assist me with a time sensitive assignment? Its 30 multiple choice questions of conceptual and calculations. Similar to these:
Are you available on 10/14 to assist me with a time sensitive assignment? Its 30 multiple choice questions of conceptual and calculations.
Similar to these:
1. It will cost $2,600 to acquire an ice cream cart. Cart sales are expected to be $1,800 a year for three years. After the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. What is the payback period?
A. 1.31 years
B. 1.44 years
C. 0.44 years
D. 2.44 years
Answer: Payback period = $2,600/$1,800 = 1.44 years
2. Ginny is considering an investment costing $55,000 that has cash flows of $35,000 in Year 2, $36,000 in Year 3, and $5,000 in Year 4. Ginny requires a rate of return of 8 percent and has a required discounted payback period of three years. Based on the discounted payback method should she make this investment? All things considered, do you agree with this decision? Why or why not?
A. yes; but only because the discounted payback requirement is met
B. no; although the project earns more than 8 percent, there is no situation where the project can pay back on a discounted basis within three years
C. no; because the discounted payback period is too short
D. yes; discounted payback indicates acceptance but that is not a wise decision asthe NPV is negative and the final cash outflow is ignored by payback
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