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Compute the investments payback period in years

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Reference no: EM132113038

Question - Middle Co. Is evaluating a proposal to invest in a new place of equipment costing $42,000 the equipment is expected to yield the following amounts per year for the 4 year useful life: Cash revenues $60,000 Cash expenses ($32,000) Depreciation (straight line) (10,000) Income provided from equipment $18,000 At Middle Co. Cost of capital, the pr sent value of an annuity of $1 dollar per year for 4 years is 3.00. The projects profitability index is: A. 1.00 B. 1.35 C. 2.00 D. 2.10 Q21: madness manufacturing Co. Is considering the following investment proposal: Initial investment: Depreciable assists (straight line) $30,000 Working capital $ 2,000 Operation (per 4 yrs): Cash receipts $20,000 Cash expenditures $11,000 De investment: Salvage value of equipment $2,000 Recovery of working capital 2,000 The investments payback period in years rounded to nearest 2 decimals is:

A. 1.50

B. 1.60

C. 3.56

D. 3.77.

Reference no: EM132113038

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