Project a as Well as Project B Require an Initial

question 2

Essay

Project A as well as project B require an initial investment of $1,050,000, have a 6-year life, and have expected total cash inflows of $1,680,000.Proposal A is expected to provide an annual net cash inflow of $280,000, while the annual net cash inflows for Proposal B are as follows:
​ $$\begin{array} { l l } \text { Year 1 } & \$ 350,000 \\\text { Year 2 } & \$ 315,000 \\\text { Year 3 } & \$ 280,000 \\\text { Year 4 } & \$ 280,000 \\\text { Year 5 } & \$ 245,000 \\\text { Year 6 } & \$ 210,000\end{array}$$ ​
Determine the cash payback period for each proposal.

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Definitions:

Departmental Contribution Margin

Departmental Contribution Margin refers to the contribution margin as calculated for specific departments within a company, showing the profit contribution of each department.

Separate Accounting Records

The practice of maintaining distinct records for different parts of a business's operations or for individual entities, ensuring clarity and precision in financial tracking.

Departments

Specific units or divisions within a business that have their own functions and responsibilities.

Departmental Income Statement

A financial statement that shows the revenue, expenses, and net income for each department within a company, helping to track the performance of distinct areas of the business.