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Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below:

Project Nuts Project Bolts

Initial Investment $175,000 $100,000
Annual Net Income $30,000 52,000
Annual Cash Inflow $70,000 $45,000
Salvage Value $0 $0
Estimated Useful Life 3 years 3 years
The company requires a 9% rate of return on all new investments.

Part (a) find out the payback period for each project.

Part (b) find out the net present value for each project.

Part (c) Which project should Jackson Company accept and why?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M947464

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