Kilebrew Manufacturing is considering an investment in a new automated manufacturing system. The new system requires an

Question:

Kilebrew Manufacturing is considering an investment in a new automated manufacturing system. The new system requires an investment of $2,400,000 and either has:

a. Even cash flows of $600,000 per year or

b. The following expected annual cash flows: $300,000, $300,000, $800,000, $800,000, and $200,000.

Required:

Calculate the payback period for each case.

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...