Cash payback period for a Service Company Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $120,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $54,000 Year 5 $29,000 Year 2 41,000 Year 6 22,000 Year 3 25,000 Year 7 17,000 Year 4 38,000 Year 8 14,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Cash payback period for a Service Company
Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $120,000 and each with an eight-year life
and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following
unequal annual net cash flows:
Year 1
$54,000
Year 5
$29,000
Year 2
41,000
Year 6
22,000
Year 3
25,000
Year 7
17,000
Year 4
38,000
Year 8
14,000
Determine the cash payback period for both location proposals.
Location 1
years
Location 2
years
Transcribed Image Text:Cash payback period for a Service Company Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $120,000 and each with an eight-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $54,000 Year 5 $29,000 Year 2 41,000 Year 6 22,000 Year 3 25,000 Year 7 17,000 Year 4 38,000 Year 8 14,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
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