Please give solution in correct and step by step detailed format thanku Don't give solution in image format The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for one through five years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation: Year Income from Operations Net Cash Flow 1 $37,500 $187,500 2 37,500 187,500 3 37,500 187,500 4 37,500 187,500 5 37,500 187,500 The cash payback period for this investment is _____. a. 5 years b. 3 years c. 4 years d. 20 years

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The management of London Corporation is considering the purchase of a new machine costing $750,000. The company's desired rate of return is 6%. The present value factors for $1 at compound interest of 6% for one through five years are 0.943, 0.890, 0.840, 0.792, and 0.747, respectively. In addition to this information, use the following data in determining the acceptability in this situation: Year Income from Operations Net Cash Flow 1 $37,500 $187,500 2 37,500 187,500 3 37,500 187,500 4 37,500 187,500 5 37,500 187,500 The cash payback period for this investment is _____.

a. 5 years

b. 3 years

c. 4 years

d. 20 years

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