Elucidate the pros and cons of using this method to evaluate

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Planning for capital investments is an important function of management. You are responsible for considering purchasing new equipment for $450,000. It is expected that the equipment will produce net annual cash flows of $55,000 over its 10-year useful life. Annual depreciation will be $45,000. Compute the cash payback period. (1) Explain the pros and cons of using this method to evaluate a capital expenditure (10 points) and (2) show all computations required to arrive at the correct solution.

Reference no: EM13129455

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