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Important information about payback period and rate of return

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Payback period and rate of return

Transit Shuttle Inc. is considering investing in two new vans that are expected to generate combined cash inflows of $20,000 per year. The van's combined purchase price is $65,000. The expected life and salvage value of each are four years and $15,000, respectively. Transit Shuttle has an average cost of capital of 14 percent.

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The expert determines the important information about payback period and rate of returns.

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