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 $150,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows:
| Year 1 | $68,000 |
| Year 2 | 51,000 |
| Year 3 | 31,000 |
| Year 4 | 29,000 |
| Year 5 | 22,000 |
| Year 6 | 16,000 |
| Year 7 | 13,000 |
| Year 8 | 10,000 |
Determine the cash payback period for both location proposals.
| Location 1 | ? |
| Location 2 | ? |
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International Accounting A User Perspective
Authors: Suadagaran, Shahrokh M, Smith Lawrence Murphy
5th Edition
1531018661, 9781531018665
