Question
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 570,000 Annual
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 570,000 Annual revenues and costs: Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out-of-pocket costs $ 40,000 The payback period for this investment is closest to:
Multiple Choice
3.35 years
7.13 years
4.38 years
2.05 years
Assume the following information for a capital budgeting proposal with a five-year time horizon: Initial investment: Cost of equipment (zero salvage value) $ 580,000 Annual revenues and costs: Sales revenues $ 300,000 Variable expenses $ 130,000 Depreciation expense $ 50,000 Fixed out-of-pocket costs $ 40,000 Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. If the companys discount rate is 12%, then the net present value for this investment is closest to:
Multiple Choice
$291,600
$(191,600)
$(291,600)
$(111,350)
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