Calculate the payback period for each project

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Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below.


Project Nuts

Project Bolts

Initial Investment

$175,000

$100,000

Annual Net Income

$30,000

52,000

Annual Cash Inflow

$70,000

$45,000

Salvage Value

$0

$0

Estimated Useful Life

3 years

3 years



The company requires a 9% rate of return on all new investments.

Part (a): Calculate the payback period for each project.
Part (b): Calculate the net present value for each project.
Part (c): Which project should Jackson Company accept and why?

 

Reference no: EM13273521

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