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Determine cash payback period for both location proposals

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Reference no: EM132717894

Problem - Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $975,000 and each with a seven-year life and expected total net cash flows of $1,050,000. Location 1 is expected to provide equal annual net cash flows of $150,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1 $275,000

Year 2 225,000

Year 3 180,000

Year 4 175,000

Year 5 $120,000

Year 6 40,000

Year 7 35,000

Required - Determine the cash payback period for both location proposals.

Reference no: EM132717894

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