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 $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 | $79,000 |
| Year 2 | 60,000 |
| Year 3 | 36,000 |
| Year 4 | 34,000 |
| Year 5 | 25,000 |
| Year 6 | 19,000 |
| Year 7 | 15,000 |
| Year 8 | 12,000 |
Determine the cash payback period for both location proposals.
| Location 1 | years |
| Location 2 | years |
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Contemporary Auditing real issues and cases
Authors: Michael C. Knapp
9th edition
978-1133839552, 113383955X, 1133187897, 978-1133710424, 1133710425, 978-1133187899
