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Exercise 16-12A (Algo) Determining the payback period LO 16-4 Rooney Aliline Company is considering expanding its territory. The company has the opportunity to purchase one
Exercise 16-12A (Algo) Determining the payback period LO 16-4 Rooney Aliline Company is considering expanding its territory. The company has the opportunity to purchase one of two different used airplanes. The first al plane is expected to cost $14790,000 it will enable the company to increase its annual cash Intlow by $5,100,000 per year. The plane is expected to have a useful life of five years and no salvage value. The second plane costs $38.400,000: it will enable the company to increase annual cash flow by $9.600.000 per year. This plane has an eightyear useful life and a zero salvage value. Required a. Determine the payback period for each Investment alternative and identify the alternative Rooney should accept if the decisions based on the payback approach (Round your answers to 1 decimal ploce.) Payback Period years yos 1. Alternative 1 (First plate) Alternative 2 (Second plano) 3-2 Rooney should accept
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