It will cost $15,000 to acquire a used food truck that is expected to produce cash inflows of $8,500 per year for five years. After the five years, the truck is expected to be worthless. What is the payback period?

Multiple Choice

• 1.5 years

• 0.8 years

• 1.8 years

• 1.3 years

• 2.7 years

• An advantage of the average accounting return method of analysis is its:

  Multiple Choice

• use of a cutoff rate as a benchmark.

• inclusion of time value of money considerations.

• use of easily obtainable information.

• use of real, versus nominal, average income.

• use of pretax income in its computation.

• Salazars Salads is considering two projects. Project X consists of creating an outdoor eating area on the unused portion of the restaurant's property. Project Z would instead use that outdoor space for creating a drive-thru service window. When trying to decide which project to accept, the firm should rely most heavily on which one of the following analytical methods?

  Multiple Choice

• Profitability index

• Internal rate of return

• Net present value

• Accounting rate of return

• Payback