Lincoln Transportation Services Is Considering a Capital Expenditure Proposal for the Improvement

question 79

Short Answer

Lincoln Transportation Services is considering a capital expenditure proposal for the improvement of its distribution centre. The project would require a capital investment of $240,000; have a 10 year useful life with no residual value and generate net cash flows of $60,000 per year Lincoln uses the straight line method of amortization on all capital assets.
Compute the payback period for this proposal.

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Definitions:

Controlling Function

One of the core functions of management, involving monitoring performance and implementing necessary actions to achieve organizational goals.

Management Process

A systematic approach involving planning, organizing, leading, and controlling organizational resources to achieve specific goals.

Ensure Results

Activities or measures taken to guarantee that the desired outcomes or objectives of a project or task are achieved.

Measurement

The process of determining the size, quantity, or degree of something typically using instruments or tools.