Cash Payback Period for a Service Company Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $125,000 and each with an eight-year life and expected total net cash flows of $200,000. Location 1 is expected to provide equal annual net cash flows of $25,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $56,000 Year 2 43,000 Year 3 26,000 Year 4 24,000 Year 5 18,000 Year 6 14,000 Year 7 11,000 Year 8 8,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
Cash Payback Period for a Service Company Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $125,000 and each with an eight-year life and expected total net cash flows of $200,000. Location 1 is expected to provide equal annual net cash flows of $25,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $56,000 Year 2 43,000 Year 3 26,000 Year 4 24,000 Year 5 18,000 Year 6 14,000 Year 7 11,000 Year 8 8,000 Determine the cash payback period for both location proposals. Location 1 years Location 2 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Cash Payback Period for a Service Company
Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $125,000 and each with an eight-year life and expected total net
| Year 1 | $56,000 |
| Year 2 | 43,000 |
| Year 3 | 26,000 |
| Year 4 | 24,000 |
| Year 5 | 18,000 |
| Year 6 | 14,000 |
| Year 7 | 11,000 |
| Year 8 | 8,000 |
Determine the cash payback period for both location proposals.
| Location 1 | years |
| Location 2 | years |
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