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Soldier Creek Corp. is considering the purchase of a piece of equipment and has compiled the information shown below. Soldier Creek uses the cash payback
Soldier Creek Corp. is considering the purchase of a piece of equipment and has compiled the information shown below. Soldier Creek uses the cash payback method as an initial screening tool and has a policy that the payback period should not be more than half of the asset's useful life. Based on this, should Soldier Creek move forward with further evaluation of the equipment purchase? Projected net annual cash flows over the project's life are: a No, because the cash payback period of 2.55 years is longer than half of the asset's 5-year useful life. b Yes, because the cash payback period of 2.36 years is less than half of the asset's 5 year useful life. c No, because the cash payback 2.82 years is longer than half of the asset's 5-year useful life. d Yes, because the cash payback period of 2.82 years is less than the asset's 5-year useful life of the asset
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