Question
Proposals M and N each cost $1,000,000, have 6-year lives, and have expected total cash flows of $1,200,000. Proposal M is expected to provide equal
Proposals M and N each cost $1,000,000, have 6-year lives, and have expected total cash flows of $1,200,000. Proposal M is expected to provide equal annual net cash flows of $200,000, while the net cash flows for Proposal N are as follows:
| Year 1 | $450,000 |
| Year 2 | $200,000 |
| Year 3 | $150,000 |
| Year 4 | $100,000 |
| Year 5 | $175,000 |
| Year 6 | $125,000 |
Determine the cash payback period for each proposal. Show all calculations. Rounds answers to 2 decimal place.
If resources are limited, which proposal should the company invest in? Why.
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The Business Innovation Audit
Authors: William Tate
1st Edition
0955970733, 978-0955970733
