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The Hanna Company uses straight- line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated: Estimated
The Hanna Company uses straight- line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated: Estimated useful life: 3 years Initial investment: $500,000 Savings year 1: $210,000 Savings year 2: $150,000 Savings year 3: $225,000 Savings year 4: $225,000 Residual value after 4 yrs $50,000 The payback period is A. 3.7 years B. 3.3 years C. 2.4 years D. 2.6 years
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