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XYZ, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: Initial
XYZ, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: Initial capital investment Estimated useful life Estimated residual value Estimated annual net cash inflow for 10 years Required rate of return Investment A $101,000 10 years o $28,000 12% Investment B $151,000 10 years $20,000 $47,000 12% Question 1 (8 points) Calculate the payback period for Investment A and Investment B. (Round your answer to two decimal places.) Question 2 (1 point) What does the payback period represent? Question 3 (1 point) What is one weakness of the payback method of analyzing a capital investment
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