Determine the cash payback period for both location proposal

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Cash Payback Period for a Service Company

Jane's Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $150,000 and each with an eight-year life and expected total net cash flows of $240,000.

Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1  $68,000

Year 2  51,000

Year 3  31,000

Year 4  29,000

Year 5  22,000

Year 6  16,000

Year 7  13,000

Year 8  10,000

Problem 1: Determine the cash payback period for both location proposals.

Reference no: EM132955079

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