Determine the cash payback period for each proposal

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Q1. Project A as well as project B require an initial investment of $1,050,000, have a 6-year life, and have expected total cash inflows of $1,680,000. Proposal A is expected to provide an annual net cash inflow of $280,000, while the annual net cash inflows for Proposal B are as follows:

Year 1

$350,000

Year 2

$315,000

Year 3

$280,000

Year 4

$280,000

Year 5

$245,000

Year 6

$210,000

Determine the cash payback period for each proposal. Round your answers to two decimal places.

Q2. Proposals L and K each cost $500,000, have 6-year lives, and have expected total cash flows of $750,000. Proposal L is expected to provide equal annual net cash flows of $125,000, while the net cash flows for Proposal K are as follows:

Year 1

$250,000

Year 2

200,000

Year 3

100,000

Year 4

90,000

Year 5

60,000

Year 6

50,000

 

$750,000

Determine the cash payback period for each proposal. Round your Proposal K answer to one decimal place.

Reference no: EM132425838

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