If the payback period is 4 years and the uniform increases in cash flows per year is $2750000, then the net initial investment can be _____________?
Correct answer: D. $11,000,000
- A. $10,511,000
- B. $12,105,000
- C. $1,100,000
- D. $11,000,000
Explanation
With uniform annual cash flows, net initial investment equals payback period multiplied by annual cash flow: 4 × $2,750,000 = $11,000,000.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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