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Cash Payback Period for a Service Company Janes Clothing Inc. is evaluating two capital investment...

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Accounting

Cash Payback Period for a Service Company

Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $175,000 and each with an eight-year life and expected total net cash flows of $280,000. Location 1 is expected to provide equal annual net cash flows of $35,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1 $79,000
Year 2 60,000
Year 3 36,000
Year 4 34,000
Year 5 25,000
Year 6 19,000
Year 7 15,000
Year 8 12,000

Determine the cash payback period for both location proposals.

Location 1 years
Location 2 years

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