Using payback to make capital investment decisions
White Co. is considering acquiring a manufacturing plant. The purchase price is $1,350,000. The owners believe the plant will generate net cash inflows of $329,000 annually. It will have to be replaced in six years.
Use the payback method to determine whether White should purchase this plant. Round to one decimal place.
Using IRR to make capital investment decisions
Refer to following data regarding Juda Products.
Compute the IRR of each project and use this information to identify the better investment