Cash Payback Period for a Service Company Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $150,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $68,000 Year 2 51,000 Year 3 31,000 Year 4 29,000 Year 5 22,000 Year 6 16,000 Year 7 13,000 Year 8 10,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
Cash Payback Period for a Service Company Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $150,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $68,000 Year 2 51,000 Year 3 31,000 Year 4 29,000 Year 5 22,000 Year 6 16,000 Year 7 13,000 Year 8 10,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 5E: Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment...
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Transcribed Image Text:Homework, Chapter 26
Cash Payback Period for a Service Company
Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet,
each requiring an investment of $150,000 and each with an eight-year life and expected
total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash
flows of $30,000, and Location 2 is expected to have the following unequal annual net
cash flows:
Year 1
$68,000
Year 2
51,000
Year 3
31,000
Year 4
29,000
Year 5
22,000
Year 6
16,000
Year 7
13,000
Year 8
10,000
Determine the cash payback period for both location proposals.
Location 1
years
Location 2
years
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