Question

Cash payback period for a Service Company Prime Financial Inc. is evaluating two capital investment proposals...

Cash payback period for a Service Company

Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $200,000 and each with an eight-year life and expected total net cash flows of $320,000. Location 1 is expected to provide equal annual net cash flows of $40,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1 $78,000 Year 5 $42,000
Year 2 58,000 Year 6 34,000
Year 3 38,000 Year 7 24,000
Year 4 26,000 Year 8 20,000

Determine the cash payback period for both location proposals.

Location 1 years
Location 2 years
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Cash Payback Period Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk,...
Cash Payback Period Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $280,000 and each with an eight-year life and expected total net cash flows of $560,000. Location 1 is expected to provide equal annual net cash flows of $70,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $109,000 Year 2 81,000 Year 3 53,000 Year 4 37,000 Year 5 98,000 Year 6...
Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an...
Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $180,000 and each with an eight-year life and expected total net cash flows of $360,000. Location 1 is expected to provide equal annual net cash flows of $45,000, and Location 2 is expected to have the following unequal annual net cash flows: Year 1 $81,000 Year 2 61,000 Year 3 38,000 Year 4 58,000 Year 5 43,000 Year 6 32,000 Year 7...
Payback Period (Uneven cash flows) When the annual cash flows are unequal, the payback period is...
Payback Period (Uneven cash flows) When the annual cash flows are unequal, the payback period is computed by adding the annual cash flows until such time as the original investment is recovered. If a fraction of a year is needed, it is assumed that cash flows occur evenly within each year. The steps for determining the payback period with uneven cash flows is as follows: Add the annual cash flows to one another until the investment is recovered. For each...
Cash Payback Method (Even cash flows) Suppose that a particular investment required an up-front capital outlay...
Cash Payback Method (Even cash flows) Suppose that a particular investment required an up-front capital outlay of $100,000. This investment is expected to yield cash flows of $40,000 per year for 10 years. What is the payback period for this investment? If required, round your answer to two decimal places. Cash Payback Period = $ / $ =  years Payback Period (Uneven cash flows) When the annual cash flows are unequal, the payback period is computed by adding the annual cash...
When the annual cash flows are unequal, the payback period is computed by adding the annual...
When the annual cash flows are unequal, the payback period is computed by adding the annual cash flows until such time as the original investment is recovered. If a fraction of a year is needed, it is assumed that cash flows occur evenly within each year. The steps for determining the payback period with uneven cash flows is as follows: Add the annual cash flows to one another until the investment is recovered. For each full year's worth of cash...
The NPV and payback period Suppose you are evaluating a project with the cash inflows shown...
The NPV and payback period Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. The project's annual cash flows are: Year Cash Flow Year 1 $400,000 Year 2 600,000 Year 3 500,000 Year 4 475,000 If the project’s desired rate...
7. The NPV and payback period Suppose you are evaluating a project with the cash inflows...
7. The NPV and payback period Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.50 years. The project's annual cash flows are: Year Cash Flow Year 1 $350,000 Year 2 600,000 Year 3 600,000 Year 4 450,000 If the project’s desired...
Metlock Inc. is contemplating a capital investment of $68000. The cash flows over the project’s four...
Metlock Inc. is contemplating a capital investment of $68000. The cash flows over the project’s four years are:Metlock Inc. is contemplating a capital investment of $68000. The cash flows over the project’s four years are: Expected Annual Expected Annual Year Cash Inflows Cash Outflows 1 $38000 $12000 2 33000 18000 3 40000 22000 4 32000 20000 The cash payback period is?
Cash Payback Method Lily Products Company is considering an investment in one of two new product...
Cash Payback Method Lily Products Company is considering an investment in one of two new product lines. The investment required for either product line is $540,000. The net cash flows associated with each product are as follows: Year Liquid Soap Body Lotion 1 $170,000    $ 90,000      2 150,000    90,000      3 120,000    90,000      4 100,000    90,000      5 70,000    90,000      6 40,000    90,000      7 40,000    90,000      8 30,000    90,000      Total $720,000    $720,000      a. Recommend a product offering to Lily Products Company, based...
Novak Inc. is contemplating a capital investment of $108000. The cash flows over the project’s four...
Novak Inc. is contemplating a capital investment of $108000. The cash flows over the project’s four years are: Expected Annual. Expected Annual. Year. Cash Inflows. Cash Outflows. 1. $36000 $12000      2. 65000 17000     3. 75000 30000      4. 70000 40000      The cash payback period is 3.09 years. 4.20 years. 3.69 years. 2.16 years.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT