89) Central Trailer Supply has received three proposals for its new trailer assembly line.
Information on each proposal is as follows:
Proposal X Proposal Y Proposal Z
Initial investment in equipment $115 000 $130 000 $145 000
Working capital needed 0 0 15 000
Annual cash saved by operations:
Year 1 55 000 60 000 60 000
Year 2 55 000 40 000 60 000
Year 3 55 000 40 000 60 000
Year 4 55 000 10 000 60 000
Salvage value end of year:
Year 1 30 000 25 000 45 000
Year 2 25 000 20 000 40 000
Year 3 20 000 15 000 35 000
Year 4 15 000 10 000 25 000
Working capital returned: 0 0 15 000
Required:
Determine each proposal's payback.
89)
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