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Question 31 Nova Manufacturing is considering two alternative investment proposals with the following data: ...

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Accounting

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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