2. Marigold Corp. is considering the purchase of a piece of equipment and has complied the information… Marigold Corp. is considering the purchase of a piece of equipment and has complied the following informationInitial costOne-time training costSalvage valueUseful life12Projected net annual cash flows over the project's life are:3$119000Year Net Annual Cash Flow4140005220005 years$3500053000580006400072000Marigold uses the cash payback method as an initial screening tool and has a policy that the payback period should not be more thanhalf of the asset's useful life. Based on this, should Marigold move forward with further evaluation of the equipment purchase? Projected net annual cash flows over the project's life are:Year Net Annual Cash Flow12345$3500053000580006400072000Marigold uses the cash payback method as an initial screening tool and has a policy that the payback period should not be more thanhalf of the asset's useful life. Based on this, should Marigold move forward with further evaluation of the equipment purchase?Yes, because the cash payback period of 2.36 years is less than half of the asset's 5-year useful life.O No, because the cash payback 2.78 years is longer than half of the asset's 5-year useful life.Yes, because the cash payback period of 2.78 years is less than the asset's 5-year useful life of the asset.O No, because the cash payback period of 2.53 years is longer than half of the asset's 5-year useful life.

The question is based on the concept of Cost Accounting. Payback period is the period in which the…

Answered: Marigold Corp. is considering the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Marigold Corp. is considering the purchase of a piece of equipment and has complied the following information Initial cost One-time training cost Salvage value Useful life $119000 14000 22000 5 years Projected net annual cash flows over the project's life are: