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bernie2981 bernie2981
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8 years ago
O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,920,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $2,500,000. The following information is available:

   Indiana proposal   Kentucky proposal
Required investment   $1,920,000   $2,500,000
Estimated life   10 years   10 years
Estimated residual value   $50,000   $80,000
Estimated annual cash inflows over the next 10 years   $400,000   $500,000
Required rate of return   10%   10%

The payback period for the Indiana proposal is closest to
A) 3.8 years.
B) 38.4 years.
C) 4.8 years.
D) 5.0 years.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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8 years ago
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