Logan Farms is evaluating the feasibility of a new grain elevator. The farm requires a...
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Logan Farms is evaluating the feasibility of a new grain elevator. The farm requires a payback of 2 years. Given the following cost/cash flow estimates, should the grain elevator be purchased?
Initial Cost Period Cash flows
$5,000,000 1 2,500,000
2 2,800,000
3 2,600,000
4 1,200,000
Yes: the payback is less than 2 years.
Yes: the payback is less than 2.5 years.
No: the payback is more than 2 years.
No: the payback is more than 3 years.
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