Option 1: If a company makes an investment of $1.000.000 in new equipment which is expected to generate $250,000 in revenue per year, the payback period is? Option 2: If they have another option to invest $1.000.000 into equipment which they expect to generate $280,000 in revenue per year, the payback period is? Which option is better for the company? Question 2 It will cost $3.700 to acquire a small ice cream cart. Cart sales are expected to be $2.900 a year for four years. After four years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?
Option 1: If a company makes an investment of $1.000.000 in new equipment which is expected to generate $250,000 in revenue per year, the payback period is? Option 2: If they have another option to invest $1.000.000 into equipment which they expect to generate $280,000 in revenue per year, the payback period is? Which option is better for the company? Question 2 It will cost $3.700 to acquire a small ice cream cart. Cart sales are expected to be $2.900 a year for four years. After four years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 1
Option 1: If a company makes an investment of $1,000,000 in new equipment which is expected to generate
$250,000 in revenue per year, the payback period is?
Option 2: If they have another option to invest $1,000,000 into equipment which they expect to generate
$280,000 in revenue per year, the payback period is?
Which option is better for the company?
Question 2
It will cost $3,700 to acquire a small ice cream cart. Cart sales are expected to be $2,900 a year for four years.
After four years, the cart is expected to be worthless as that is the expected remaining life of the cooling system.
What is the payback period of the ice cream cart?
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