Question
Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $150,000 and each with an eight-year
Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $150,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows:
| Year 1 | $59,000 | Year 5 | $31,000 | |
| Year 2 | 44,000 | Year 6 | 25,000 | |
| Year 3 | 29,000 | Year 7 | 18,000 | |
| Year 4 | 18,000 | Year 8 | 16,000 |
Determine the cash payback period for both location proposals.
| Location 1 | 12345678 years |
| Location 2 | 12345678 years |
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Financial Accounting an introduction to concepts, methods and uses
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
13th Edition
978-0538776080, 324651147, 538776080, 9780324651140, 978-0324789003
