Answered

IDNLearn.com is designed to help you find the answers you need quickly and easily. Join our Q&A platform to receive prompt and accurate responses from knowledgeable professionals in various fields.

Mr. J's Bagels invested in a new oven for $14,000. The oven reduced the amount of time for baking which increased production and sales for five years by the following amounts of cash inflows:
Year 1: $8,000
Year 2: $6,000
Year 3: $5,000
Year 4: $6,000
Year 5: $5,000
The payback period for the investment in the oven would be:
a: 5 years
b: 2.3 years
c: 2.0 years
d: 0.5 years

Sagot :

Answer:

c: 2.0 years

Explanation:

The computation of the payback period is shown below:

Since initial investment is $14,000

And, if we add the first two cash inflows i.e.

= $8,000 + $6,000

= $14,000

So, it is equivalent to the initial investment made

So, this means the investment amount payback in 2 years

Therefore the option c is correct

Thank you for contributing to our discussion. Don't forget to check back for new answers. Keep asking, answering, and sharing useful information. IDNLearn.com has the solutions you’re looking for. Thanks for visiting, and see you next time for more reliable information.