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 XProject YInitial investment$254,499$181,089Net cash flows anticipated:Year 182,00035,000Year 260,00056,000Year 391,00072,000Year 481,00068,00076,00027,000Year 5A. Compute the IRR for both projects using the IRR spreadsheet function.%Project XProject YB. Which project should be recommended.

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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?

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?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3EA: If a copy center is considering the purchase of a new copy machine with an initial investment cost...

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Question

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.

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