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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