If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year, what is the payback period?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year, what is the payback period?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year,
what is the payback period?
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdc14315-d9c8-4f5c-89a2-2a6f1b0cb026%2Fa9b6e232-346f-4ef0-9cc2-78dc9289b053%2F07y0rd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:If a copy center is considering the purchase of a new copy machine with an initial investment cost of $145,800 and the center expects an annual net cash flow of $18,000 per year,
what is the payback period?
years
![Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value.
Project X
Project Y
Initial investment
$254,499
$181,089
Net cash flows anticipated:
Year 1
82,000
35,000
Year 2
60,000
56,000
Year 3
91,000
72,000
Year 4
81,000
68,000
76,000
27,000
Year 5
A. Compute the IRR for both projects using the IRR spreadsheet function.
%
Project X
Project Y
B. Which project should be recommended.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdc14315-d9c8-4f5c-89a2-2a6f1b0cb026%2Fa9b6e232-346f-4ef0-9cc2-78dc9289b053%2Fk8pwumq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Pitt Company is considering two alternative investments. The company requires a 12% return from its investments. Neither option has a salvage value.
Project X
Project Y
Initial investment
$254,499
$181,089
Net cash flows anticipated:
Year 1
82,000
35,000
Year 2
60,000
56,000
Year 3
91,000
72,000
Year 4
81,000
68,000
76,000
27,000
Year 5
A. Compute the IRR for both projects using the IRR spreadsheet function.
%
Project X
Project Y
B. Which project should be recommended.
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