Question/ Requirement: Determine each project's payback period.How many years?? *The previous answer a tutor gave me was 3.07 but was wrong*please help. Info Given: Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Project 2: Purchase Patent for New Product The patent would cost $3,400,000, which would be fully amortized over five years. Production of this product would generate $425,000 additional annual net income for Hearne.
Question/ Requirement: Determine each project's payback period.How many years??
*The previous answer a tutor gave me was 3.07 but was wrong*please help.
Info Given: Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume
Project 2: Purchase Patent for New Product
The patent would cost $3,400,000, which would be fully amortized over five years. Production of this product would generate $425,000 additional annual net income for Hearne.
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