Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the Alabama–Georgia border. There are three cities being considered. After site visits and a budget analysis, the expected income and costs associated with locating in each of the cities have been determined. The life of the warehouse is expected to be 12 years, and MARR is 15%/year. Solve, a. What is the discounted payback period for each location? b. Which city should Quantum Logistics select if they wish to minimize the DPBP ?
Transcribed Image Text:City
Initial Cost Net Annual Income
Lagrange $1,260,000
$480,000
Auburn $1,000,000
$410,000
Anniston $1,620,000
$520,000
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