Proposals M and N each cost $550,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal M is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal N are as follows:Year 1 $250,000Year 2 200,000Year 3 150,000Year 4 75,000Year 5 50,000Year 6 25,000 $750,000 Determine the cash payback period for each proposal. Round your answers to three decimal places.Proposal M________?_______ yearsProposal N ________?________years

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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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Proposals M and N each cost $550,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal M is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal N are as follows:

Year 1		$250,000
Year 2		200,000
Year 3		150,000
Year 4		75,000
Year 5		50,000
Year 6		25,000
		$750,000

Determine the cash payback period for each proposal. Round your answers to three decimal places.

Proposal M	________?_______ years
Proposal N	________?________years

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