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Exercise 16-12A (Algo) Determining the payback period LO 16-4 Baird Airline Company is considering expanding its teritory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $13.020,000, it will enable the company to increase its annual cash inflow by $6.200,000 per year. The plane is expected to have a useful lide of five years and no salvage value. The second plane costs $40,040,000, it will enable the company to increase annual cash flow by $9.100,000 per year. This plane has an eight-year useful life and a zero salvage value Required 6. Determine the payback period for each investment alternative and identify the altenative Baird should accept if the decision is based on the payback approach (Round your answers to 1 decimel place.) Payback Perlod a-1. Alternative 1 (First plane) years Altemative 2 (Second plane) years

Exercise 16-12A (Algo) Determining the payback period LO 16-4 Baird Airline Company is considering expanding its teritory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $13.020,000, it will enable the company to increase its annual cash inflow by $6.200,000 per year. The plane is expected to have a useful lide of five years and no salvage value. The second plane costs $40,040,000, it will enable the company to increase annual cash flow by $9.100,000 per year. This plane has an eight-year useful life and a zero salvage value Required 6. Determine the payback period for each investment alternative and identify the altenative Baird should accept if the decision is based on the payback approach (Round your answers to 1 decimel place.) Payback Perlod a-1. Alternative 1 (First plane) years Altemative 2 (Second plane) years

Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 16P: REPLACEMENT CHAIN The Fernandez Company has an opportunity to invest in one of two mutually...
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Exercise 16-12A (Algo) Determining the payback period LO 16-4 Baird Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $13,020,000, it will enable the company to increase its annual cash inflow by $6.200,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $40,040,000, it will enable the company to increase annual cash flow by $9.100,000 per year. This plane has an eight-year useful life and a zero salvage value. Required o. Determine the payback period for each investment alternative and identify the alternative Baird should accept if the decision is based on the payback approach. (Round your answers to 1 decimal place.) Payback Period a-1. Alternative 1 (First plane) years Altenative 2 (Second plane) years a-2. Baird should accept
Transcribed Image Text:Exercise 16-12A (Algo) Determining the payback period LO 16-4 Baird Airline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first airplane is expected to cost $13,020,000, it will enable the company to increase its annual cash inflow by $6.200,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $40,040,000, it will enable the company to increase annual cash flow by $9.100,000 per year. This plane has an eight-year useful life and a zero salvage value. Required o. Determine the payback period for each investment alternative and identify the alternative Baird should accept if the decision is based on the payback approach. (Round your answers to 1 decimal place.) Payback Period a-1. Alternative 1 (First plane) years Altenative 2 (Second plane) years a-2. Baird should accept
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