Pink Petunias, a wholesale nursery, is considering purchasing a new plot of land for their business for $300,000. The land would allow Pink Petunias to increase their pre-tax cash flows by $90,000 each year. The company would plan to keep the land for 20 years before selling it for $300,000. Because the land is real property, the company would not take any related depreciation. Pink Petunias' tax rate is 25%, and the required rate of return is 9%. What is the Cash Payback Period of the proposed investment? Select one: O O O a. 20 years b. 3.33 years c. 4.44 years d. None of the above
Pink Petunias, a wholesale nursery, is considering purchasing a new plot of land for their business for $300,000. The land would allow Pink Petunias to increase their pre-tax cash flows by $90,000 each year. The company would plan to keep the land for 20 years before selling it for $300,000. Because the land is real property, the company would not take any related depreciation. Pink Petunias' tax rate is 25%, and the required rate of return is 9%. What is the Cash Payback Period of the proposed investment? Select one: O O O a. 20 years b. 3.33 years c. 4.44 years d. None of the above
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 4P
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