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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 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

FINANCIAL ACCOUNTING
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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  1. 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
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