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Question 31
Nova Manufacturing is considering two alternative investment proposals with the following data:
Proposal X Proposal Y
Investment $10,700,000 $580,000
Useful Life 5 years 5 years
Estimated annual net cash inflows for 5 years $2,140,000 $103,000
Residual Value $50,000 $26,000
Depreciation Method Straight-line Straight-line
Required rate of return 12% 13%
Calculate the payback period for Proposal X
| | A. | 5 years |
| | B. | 9 years |
| | C. | 4 years |
| | D. | 8 years |
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