Cash payback period for a service company Haukea Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $140,000 and each with an eight-year life and expected total net cash flows of $280,000. Location 1 is expected to provide equal annual net cash flows of $35,000, and Location 2 is expected to have the following unequal annual net cash flows: Year Amount Year Amount Year 1 $63,000 Year 5 $34,000 Year 2 48,000 Year 6 25,000 Year 3 29,000 Year 7 20,000 Year 4 45,000 Year 8 16,000 Determine the cash payback period for both location proposals. Location Year Location 1 years Location 2 years
Cash payback period for a service company Haukea Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $140,000 and each with an eight-year life and expected total net cash flows of $280,000. Location 1 is expected to provide equal annual net cash flows of $35,000, and Location 2 is expected to have the following unequal annual net cash flows: Year Amount Year Amount Year 1 $63,000 Year 5 $34,000 Year 2 48,000 Year 6 25,000 Year 3 29,000 Year 7 20,000 Year 4 45,000 Year 8 16,000 Determine the cash payback period for both location proposals. Location Year Location 1 years Location 2 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cash payback period for a service company
Haukea Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $140,000 and each with an eight-year life and expected total net
| Year | Amount | Year | Amount |
|---|---|---|---|
| Year 1 | $63,000 | Year 5 | $34,000 |
| Year 2 | 48,000 | Year 6 | 25,000 |
| Year 3 | 29,000 | Year 7 | 20,000 |
| Year 4 | 45,000 | Year 8 | 16,000 |
Determine the cash payback period for both location proposals.
| Location | Year |
|---|---|
| Location 1 |
|
| Location 2 |
|
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