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

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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
Transcribed Image Text: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
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