Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will provide annual
labor savings and reduced waste totaling $190,000 while the initial investment is only $480,000. Callaway's management has used a simple payback method for evaluating new investments in the
past but plans to calculate the discounted payback to analyze the investment. Where the appropriate discount rate for this type of project is 12 percent, what is the project's discounted payback
period?
The project's discounted payback period is years (Round to two decimal places.)
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Transcribed Image Text:(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system for its feed lot in Abilene, Kansas. The new system will provide annual labor savings and reduced waste totaling $190,000 while the initial investment is only $480,000. Callaway's management has used a simple payback method for evaluating new investments in the past but plans to calculate the discounted payback to analyze the investment. Where the appropriate discount rate for this type of project is 12 percent, what is the project's discounted payback period? The project's discounted payback period is years (Round to two decimal places.)
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