Question
Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 Ferry Company is
Present Value of an Annuity of 1
Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111
Ferry Company is evaluating two capital investment proposals. Figures have been provided to estimate each project below:
Project Fish Project Cheese
Initial investment $400,000 $600,000
Annual net income 25,000 45,000
Net annual cash inflow 100,000 142,000
Estimated useful life 5 years 6 years
Salvage value -0- -0-
Ferry company requires a 10% rate of return on all new investments.
The cash payback period for Project Fish is
Select one:
a. 20 years
b. 10 years
c. 5 years
d. 4 years
e. None of the above
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