The following incomplete information is provided for an investment decision.

 

 

Using break-even time (BET) analysis, when will the investment be recovered?

a. At the end of year 2

b. In 2.73 years

c. In 2.21 years

d. Longer than three years

2. Assume the following information pertains to Company R, Company M, and for their common industry for a recent year:

 

 

 

The attitudes of both Rand M concerning risk (particularly on leverage) are best explained by the 

a. Inventory turnover and earnings per share.

b. Debt-to-equity ratio and times interest earned.

c. Current ratio and earnings per share. 

d. Dividend payout ratio and earnings per share. 

e. Current ratio, accounts receivable turnover, and inventory turnover.

3. Abundance Company is considering two capital investment proposals. Estimates regarding each project are provided below:

  

The cash payback period for Project Soup is

a. 10 years.

b. 4 years.

c. 5 years.

d. 20 years.      
 
 
 

Transcribed Image Text:

Year Cash Flow Discount Discounted Cumulative Factor Cash Flows Cash Flows (10%) 0 P(450,000) 1.000 P(450,000) P(450,000) 1 280,000 909 254,520 2 210,000 .826 3 140,000 .751 Year Cash Flow Discount Discounted Cumulative Factor Cash Flows Cash Flows (10%) 0 P(450,000) 1.000 P(450,000) P(450,000) 1 280,000 909 254,520 2 210,000 .826 3 140,000 .751