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tatiyna
3 years ago
5

Houston Fashions is considering a new product line that would require an investment of $ 140,000 in fixtures and displays and $

180,000 in working capital. Store managers expect the following pattern of net cash inflows from the new product line over the life of the investment.
Year Amount
1 ......... $70,000
2 ......... 78,000
3 ......... 72,000
4 ......... 56,000
5 ......... 50,000
6 ......... 48,000
7 ......... 44,000
a. Compute the payback period for the proposed new product line. Houston Fashions requires a four- year pre-tax payback period on its investments. (Round to one decimal point.) Should the company make this investment? Explain.
b. Should Houston Fashions use any other capital project evaluation method(s) before making an investment decision? Explain.
Business
1 answer:
steposvetlana [31]3 years ago
6 0

Answer:

4.88 years

other methods should be used because payback method does not account for the time value of money

Explanation:

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Answer:

Consider the following calculations

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In Step II we first determine the remaining balance at the end of year 7. This requires using the amortization worksheet.

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3 years ago
The fact that corporate travelers are less price sensitive than most leisure travelers because the corporation pays for the trav
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Answer:

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They also began to use the language of the Empire: Latin, for ecclessiastical and political matters, and while political institutions did change a lot, some of the political institutions of the Empire did survive in the sucessor states that the Germanic rulers carved out of the Roman territory.

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Answer:

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