The Company is considering investing in two alternative projects: Project 1 Project 2 Investment $200,000 $240,000 Useful life (years) 4 5 Estimated annual net cash inflows for useful life $130,000 $65,000 Residual value $20,000 $10,000 Depreciation method Straight-line Straight-line Required rate of return 13% 8% What is the payback period for Project 2? 12.00 years 10.00 years 3.69 years 1.54 years
The Company is considering investing in two alternative projects: Project 1 Project 2 Investment $200,000 $240,000 Useful life (years) 4 5 Estimated annual net cash inflows for useful life $130,000 $65,000 Residual value $20,000 $10,000 Depreciation method Straight-line Straight-line Required rate of return 13% 8% What is the payback period for Project 2? 12.00 years 10.00 years 3.69 years 1.54 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Company is considering investing in two alternative projects:
Project 1 Project 2 Investment $200,000 $240,000 Useful life (years) 4 5 Estimated annual net cash inflows for useful life$130,000 $65,000 Residual value $20,000 $10,000 Depreciation methodStraight-line Straight-line Required rate of return 13% 8%
What is the payback period for Project 2?12.00 years
10.00 years
3.69 years
1.54 years
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