Question
Cash payback period for a Service Company Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment
Cash payback period for a Service Company
Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $140,000 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 | $63,000 | Year 5 | $34,000 | |
| Year 2 | 48,000 | Year 6 | 25,000 | |
| Year 3 | 29,000 | Year 7 | 20,000 | |
| Year 4 | 45,000 | Year 8 | 16,000 |
Determine the cash payback period for both location proposals.
| Location 1 | years |
| Location 2 | years |
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Fundamental Accounting Principles
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
20th Edition
1259157148, 78110874, 9780077616212, 978-1259157141, 77616219, 978-0078110870
