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Is this correct: Part 1: Situation:Dogs R Us is considering two investment opportunities with the following expected cash flows: Project A Project B Year Investment
Is this correct:
| Part 1: | ||||||||||
| Situation:Dogs R Us is considering two investment opportunities with the following expected cash flows: | ||||||||||
| Project A | Project B | |||||||||
| Year | Investment | Cash Inflow | Year | Investment | Cash Inflow | |||||
| 1 | $ 86,000 | $ 24,200 | 1 | $ 82,000 | $ 11,000 | |||||
| 2 | $ 18,600 | 2 | $ 11,000 | |||||||
| 3 | $ 14,700 | 3 | $ 11,000 | |||||||
| 4 | $ 11,500 | 4 | $ 11,000 | |||||||
| 5 | $ 8,300 | 5 | $ 11,000 | |||||||
| 6 | $ 5,200 | 6 | $ 11,000 | |||||||
| 7 | $ 4,300 | 7 | $ 11,000 | |||||||
| 8 | $ 1,200 | 8 | $ 11,000 | |||||||
| a. Compute the payback period of the following investment alternatives. Where necessary, carry comuptations to two decimal places. | ||||||||||
| Project A = | 6.81 years | Project B = | 7.45 years | |||||||
| b. If the company requires a payback period of 7 years, which project(s) would it be willing to invest in? Explain. |
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Financial and Managerial Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
12th edition
978-1133952428, 1285078578, 1133952429, 978-1285078571
