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MrJ's Bagels Invested in a New Oven for $14,000 Using the Averaging Method,the Payback Period for the Investment in Reduced

Question 44

Multiple Choice

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  Year 2  Year 3  Year 4  Year 5 $8,000$6,000$5,000$6,000$5,000\begin{array}{|l|l|l|l|l|}\hline \underline {\text { Year 1 }} & \underline {\text { Year 2 }} & \underline {\text { Year 3 }} & \underline {\text { Year 4 }} & \underline {\text { Year 5 }} \\\hline \$ 8,000 &\$ 6 ,000&\$ 5,000&\$ 6 ,000&\$5 ,000\\\hline\end{array} Using the averaging method,the payback period for the investment in the oven would be:


A) 5.0 years.
B) 2.3 years.
C) 2.0 years.
D) 0.5 years.

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