Mastery Problem: Cash Payback and Average Rate of Return (Advanced) ?) .RA.. Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that do not use present values are (1) Average rate of return method and (2) Cash payback method. NEY Methods that do not use present value One category of capital investment evaluation methods does not use present value. The primary difference between the category of methods that do use present value and this category is that this category does not V take the time value of money into account. The basic premise of the time value of money is that a dollar today is worth more than V a dollar tomorrow. True or False: Considering the fact that most firms use methods from each category, it can be concluded that both categories have value. True Feedback Check My Work Hover over each underlined definition with your mouse to review characteristics of each category Cash Payback Method This method identifies how long it will take (in years) to recover the initial investment V . The particulars of the method vary depending on whether the cash flows from an investment are even or uneven. Cash Payback Method (Even cash flows) Suppose that a particular investment required an up-front capital outlay of $100,000. This investment is expected to yield cash flows of $30,000 per year for 10 years. What is the payback period for this investment? If required, round your answer to two decimal places, Cash Payback Period = years