The amount of the estimated average income for a proposed investment of $60,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of four years, no residual value, and an expected total income yield of $21,300, is a.$15,000 b.$21,300 c.$5,325 d.$8,700
The amount of the estimated average income for a proposed investment of $60,000 in a fixed asset, giving effect to
Proposals A and B each cost $600,000 and have five-year lives. Proposal A is expected to provide equal annual net cash flows of $159,000, while the net cash flows for Proposal B are as follows:
| Year 1 | $150,000 | |
| Year 2 | 140,000 | |
| Year 3 | 110,000 | |
| Year 4 | 150,000 | |
| Year 5 | 50,000 | |
| $600,000 |
Determine the cash payback period for each proposal. Round your answers to two decimal places, if necessary.
| Proposal A: | __ years |
| Proposal B: | __ years |
Below is a table for the present value of $1 at Compound interest.
| Year | 6% | 10% | 12% |
| 1 | 0.943 | 0.909 | 0.893 |
| 2 | 0.890 | 0.826 | 0.797 |
| 3 | 0.840 | 0.751 | 0.712 |
| 4 | 0.792 | 0.683 | 0.636 |
| 5 | 0.747 | 0.621 | 0.567 |
Below is a table for the present value of an annuity of $1 at compound interest.
| Year | 6% | 10% | 12% |
| 1 | 0.943 | 0.909 | 0.893 |
| 2 | 1.833 | 1.736 | 1.690 |
| 3 | 2.673 | 2.487 | 2.402 |
| 4 | 3.465 | 3.170 | 3.037 |
| 5 | 4.212 | 3.791 | 3.605 |
Using the tables above, what would be the present value of $11,484 (rounded to the nearest dollar) to be received four years from today, assuming an earnings rate of 10%?
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