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The management of River Corporation is considering the purchase of a new machine costing 5380,000. The company's desired rate of return is 6%. The present
The management of River Corporation is considering the purchase of a new machine costing 5380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 Income from Operations $20,000 20,000 20.000 20,000 20,000 Net Cash Flow 595,000 95,000 95,000 95,000 95,000 3 4 5 The cash payback period for this investment is Oa. 20 years Ob. 5 years Oc. 4 years Od. 3 years
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