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Calculate the payback period for proposal x

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Reference no: EM132203248

Newman Automobiles Manufacturing is considering two alternatives investment proposals with the following data:

Proposal X Proposal Y

investment $10,700,000 $580,000

Useful life 5 years 5 years

Estimated annual cash inflows

for 5 years $2,140,000 $103,000

Residual value $50,000 $26,000

Depreciation Method Straight-line Straight-line

Required rate return 12% 13%

Calculate the payback period for Proposal X

Reference no: EM132203248

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