EX 25-5 Cash payback period for a service company Obj. 2 Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $900,000 and each with an eight-year life and expected total net cash flows of $1,000,000. Location 1 is expected to provide equal annual net cash flows of $200,000, and Location 2 is expected to have the following unequal annual net cash flows: V Location 1: 4.5 years SHOW ME HOW Year 1 $300,000 Year 5 $50,000 Year 2 220,000 Year 6 50,000 Year 3 180,000 Year 7 30,000 Year 4 150,000 Year 8 20,000 Determine the cash payback period for both location proposals.
EX 25-5 Cash payback period for a service company Obj. 2 Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $900,000 and each with an eight-year life and expected total net cash flows of $1,000,000. Location 1 is expected to provide equal annual net cash flows of $200,000, and Location 2 is expected to have the following unequal annual net cash flows: V Location 1: 4.5 years SHOW ME HOW Year 1 $300,000 Year 5 $50,000 Year 2 220,000 Year 6 50,000 Year 3 180,000 Year 7 30,000 Year 4 150,000 Year 8 20,000 Determine the cash payback period for both location proposals.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:EX 25-5 Cash payback period for a service company
Obj. 2
Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each
requiring an investment of $900,000 and each with an eight-year life and expected total net
cash flows of $1,000,000. Location 1 is expected to provide equal annual net cash flows of
$200,000, and Location 2 is expected to have the following unequal annual net cash flows:
V Location 1: 4.5 years
SHOW ME HOW
Year 1 $300,000
Year 5 $50,000
Year 2 220,000
Year 6 50,000
Year 3 180,000
Year 7
30,000
Year 4
150,000
Year 8
20,000
Determine the cash payback period for both location proposals.
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