3. Woodbridge Accessories is considering the purchase of a land and the construction of a new factory. The land, to be bought immediately, has a cost of $150,000 and the building, to be developed by the end of the first year, would cost $225,000. It is estimated that the firm's after-tax cash flow will be increased by $80,000 starting at the end of the second year, and that this incremental flow would increase at a constant rate of 20% per year over the next 10 years. What is the approximate payback period of this investment?
3. Woodbridge Accessories is considering the purchase of a land and the construction of a new factory. The land, to be bought immediately, has a cost of $150,000 and the building, to be developed by the end of the first year, would cost $225,000. It is estimated that the firm's after-tax cash flow will be increased by $80,000 starting at the end of the second year, and that this incremental flow would increase at a constant rate of 20% per year over the next 10 years. What is the approximate payback period of this investment?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...
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