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 $160,000 and each with an eight-year life and expected total net cash flows of $320,000. Location 1 is expected to provide equal annual net cash flows of $40,000, and Location 2 is expected to have the following unequal annual net cash flows: $72,000 Year 1 Year 5 $38,000 Year 2 54,000 Year 6 29,000 34,000 Year 3 Year 7 22,000 Year 8 Year 4 51,000 20,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 $160,000 and
each with an eight-year life and expected total net cash flows of $320,000. Location 1 is expected to provide equal annual net cash flows of
$40,000, and Location 2 is expected to have the following unequal annual net cash flows:
$72,000
Year 1
Year 5
$38,000
Year 2
54,000
Year 6
29,000
34,000
Year 3
Year 7
22,000
Year 8
Year 4
51,000
20,000
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 $160,000 and each with an eight-year life and expected total net cash flows of $320,000. Location 1 is expected to provide equal annual net cash flows of $40,000, and Location 2 is expected to have the following unequal annual net cash flows: $72,000 Year 1 Year 5 $38,000 Year 2 54,000 Year 6 29,000 34,000 Year 3 Year 7 22,000 Year 8 Year 4 51,000 20,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
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