Question
Redwood Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $820,000 $490,000 Useful life 8 years 8 years
Redwood Corporation is considering two alternative investment proposals with the following data:
| Proposal X | Proposal Y | |
| Investment | $820,000 | $490,000 |
| Useful life | 8 years | 8 years |
| Estimated annual net cash inflows for8 years | $115,000 | $79,000 |
| Residual value | $22,000 | $ |
| Depreciation method | Straightline | Straightline |
| Required rate of return | 19% | 5% |
How long is the payback period for Proposal X?
A.
6.2
years
B.
7.13
years
C.
37.27
years
D.
10.38
years
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Financial Accounting, Enhanced
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
11th Edition
1119594596, 9781119594598
