Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service...

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Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $120,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $32,000 per year, but would also require her to pay $14,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? o month(s) E o year(s) E Round up to the next month b. Does this investment satisfy Clara's payback rule? Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $120,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $32,000 per year, but would also require her to pay $14,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? o month(s) E o year(s) E Round up to the next month b. Does this investment satisfy Clara's payback rule?

Answer rating: 100% (QA)

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