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Capital Budgeting - Payback Period and Acceptance

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Carmen Electronics bought a new machine for $5 million. This is expected to result in additional cash flows of $1.2 million over the next seven years. What is the payback period for this project? If their acceptance period is 5 years, will this project be accepted?
a. 4.17 years; yes c. 3.83 years, yes
b. 4.17 years; no d. 3.83 years; no

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Solution Summary

Payback Period Methods and acceptance are determined.

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