Primera Banco is evaluating two capital investment proposals for a drive-up ATM

Question

Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring and investment of $360,000 and each with an 8-year life and expected totoal net cash flows of $480,000. Location 1 is expected to provide equal annual net cash flows of $60,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1 $120,000
Year 2 90,000
Year 3 75,000
Year 4 75,000
Year 5 30,000
Year 6 30,000
Year 7 30,000
Year 8 30,000

Determine the cash payback period for both location proposals.

Explanation / Answer

Payback period of location 1 - 6 years Payback petriod of location 2= 4 years happy to help

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