Question

Question content area top part 1 juniper corporation is considering two alternative investment proposals with the following​ data: proposal x proposal y investment ​$880,000 ​$548,000 useful life 10 years 10 years estimated annual net cash inflows for 10 years ​$120,000 ​$68,000 residual value ​$44,000 ​$ depreciation method straightline straightline required rate of return ​14% ​8% how long is the payback period for proposal​ y?

Answer 1

The payback period for Proposal Y, which has an investment of $548,000 and an annual net cash inflow of $68,000, is 8.06 years, calculated by dividing the initial investment by the annual cash inflow.

Step-by-step explanation:

To calculate the payback period for Proposal Y, you need to divide the initial investment by the annual net cash inflows. The payback period is the amount of time it takes for the investment to generate an amount of cash flow equal to the initial investment.

For Proposal Y, the initial investment is $548,000, and the estimated annual net cash inflows are $68,000. Therefore, the payback period for Proposal Y would be calculated as follows:

Payback Period = Initial Investment ÷ Annual Net Cash Inflows

Payback Period for Proposal Y = $548,000 ÷ $68,000 = 8.06 years

This means that it would take a little over 8 years for Proposal Y to return the initial investment.