Question
Cash Payback Period for a Service Company Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of
Cash Payback Period for a Service Company
Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $175,000 and each with an eight-year life and expected total net cash flows of $280,000. Location 1 is expected to provide equal annual net cash flows of $35,000, and Location 2 is expected to have the following unequal annual net cash flows:
| Year 1 | $68,000 |
| Year 2 | 51,000 |
| Year 3 | 33,000 |
| Year 4 | 23,000 |
| Year 5 | 37,000 |
| Year 6 | 29,000 |
| Year 7 | 21,000 |
| Year 8 | 18,000 |
Determine the cash payback period for both location proposals.
| Location 1 | years |
| Location 2 | years |
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International Financial Reporting Standards A Practical Guide
Authors: Hennie Van Greuning, Darrel Scott, Simonet Terblanche
6th Edition
0821384287, 978-0821384282
