Obj. 2 Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $975,000 and each with a seven-year life and expected total net cash flows of $1,050,000. Location 1 is expected to provide equal annual net cash flows of $150,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Determine the cash payback period for both location proposals. LOCATION 1: 6,5 YEARS $275,000 225,000 180,000 175,000 $120,000 40,000 35,000

Obj. 2 Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $975,000 and each with a seven-year life and expected total net cash flows of $1,050,000. Location 1 is expected to provide equal annual net cash flows of $150,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Determine the cash payback period for both location proposals. LOCATION 1: 6,5 YEARS $275,000 225,000 180,000 175,000 $120,000 40,000 35,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 5E: Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment...

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