ncertain annual cash flow) Central City Consulting is considering the instal¬ lation of a new system for electronically filing tax returns. The system has an initial cost of $60,000 and an expected life of five years.

a. If the company’s cost of capital is 10 percent, how much annual in¬ crease in cash flows is necessary to minimally justify the investment?

b. Based on your answer to part (a), what would be the payback period for this investment?

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