Question
Cash Payback Period for a Service Company Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of
Cash Payback Period for a Service Company
Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $180,000 and each with an eight-year life and expected total net cash flows of $360,000. Location 1 is expected to provide equal annual net cash flows of $45,000, and Location 2 is expected to have the following unequal annual net cash flows:
| Year 1 | $81,000 |
| Year 2 | 61,000 |
| Year 3 | 38,000 |
| Year 4 | 58,000 |
| Year 5 | 43,000 |
| Year 6 | 32,000 |
| Year 7 | 25,000 |
| Year 8 | 22,000 |
Determine the cash payback period for both location proposals.
| Location 1 | years |
| Location 2 | years |
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Financial Accounting For Executives And MBAs
Authors: Ferris & Wallace
2nd Edition
1934319627, 978-1934319628
