Question
Salsa Company is considering an investment in technology to improve its operations. The investment costs $251,000 and will yield the following net cash flows. Management
Salsa Company is considering an investment in technology to improve its operations. The investment costs $251,000 and will yield the following net cash flows. Management requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year Net cash Flow 1 $ 48,100 2 53,100 3 75,500 4 95,100 5 126,400 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. 4. Should management invest in this project based on net present value?
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