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Calculate the payback period for each project

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Question - 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: EM131875912

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