(a) What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 12.52.) Cash payback period years

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Vishanu

MCA Corporation is reviewing an investment proposal. The schedule below presents the initial cost and estimates of the book value of the investment at the end of each year, the net
cash flows for each year, and the net income for each year. All cash flows are assumed to take place at the end of the year. The investment's salvage value at the end of each year is
equal to its book value. There would be no salvage value at the end of the investment's life.
Investment Proposal
Year
0
1
2
3
4
5
Initial Cost and Book
Value
$104,000
69,000
41,000
20,000
6,000
0
Annual Cash Flows Annual Net Income
$49,000
44,000
39,000
34,000
29,000
MCA Corporation uses a 15% target rate of return for new investment proposals.
$14,000
16,000
18,000
years
20,000
22,000
▼ (a)
What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 12.52.)
Cash payback period
Transcribed Image Text:MCA Corporation is reviewing an investment proposal. The schedule below presents the initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year. All cash flows are assumed to take place at the end of the year. The investment's salvage value at the end of each year is equal to its book value. There would be no salvage value at the end of the investment's life. Investment Proposal Year 0 1 2 3 4 5 Initial Cost and Book Value $104,000 69,000 41,000 20,000 6,000 0 Annual Cash Flows Annual Net Income $49,000 44,000 39,000 34,000 29,000 MCA Corporation uses a 15% target rate of return for new investment proposals. $14,000 16,000 18,000 years 20,000 22,000 ▼ (a) What is the cash payback period for this proposal? (Round answer to 2 decimal places, e.g. 12.52.) Cash payback period
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