Proposals L and K each cost $500,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal L is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal K are as follows: Year 1 $250,000 Year 2 200,000 Year 3 100,000 Year 4 90,000 Year 5 60,000 Year 6 50,000 $750,000 Determine the cash payback period for each proposal. Round your Proposal K answer to one decimal place. Cash Payback Period Proposal L fill in the blank 1 years Proposal K fill in the blank 2 years

Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter19: Capital Investment
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  1. Proposals L and K each cost $500,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal L is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal K are as follows:

    Year 1 $250,000
    Year 2 200,000
    Year 3 100,000
    Year 4 90,000
    Year 5 60,000
    Year 6 50,000
      $750,000

    Determine the cash payback period for each proposal. Round your Proposal K answer to one decimal place.

      Cash Payback Period
    Proposal L fill in the blank 1 years
    Proposal K fill in the blank 2 years
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