Proposals L and K Each Cost $600,000, Have 6-Year Lives

question 92

Short Answer

Proposals L and K each cost $600,000, have 6-year lives, and have expected total cash flows of $720,000. Proposal L is expected to provide equal annual net cash flows of $170,000, while the net cash flows for Proposal K are as follows:
Determine the cash payback period for each proposal. Round your answers to two decimal places.

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Definitions:

Market Maker

A firm or individual that quotes both a buy and a sell price in a financial market or commodity, hoping to make a profit on the bid-offer spread.

Transactions

The act of conducting business or exchange between parties, often involving the transfer of goods, services, or funds.

Total Profit

The total income of a business after all expenses and costs have been subtracted from its total revenues.

Market Maker

An entity that buys and sells large quantities of a particular asset to facilitate liquidity and efficiency in financial markets.