Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment

Question:

Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $360,000 and each with an 8-year life and expected total net cash flows of $480,000. Location 1 is expected to provide equal annual net cash flows of $60,000, and Location 2 is expected to have the following unequal annual net cash flows:
Year 1 .......... $120,000
Year 2 ........... 90,000
Year 3 ........... 75,000
Year 4 ........... 75,000
Year 5 ........... 30,000
Year 6 ........... 30,000
Year 7 ........... 30,000
Year 8 ........... 30,000
Determine the cash for both location proposals.

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,...