Question: Cato Products is considering acquiring a manufacturing plant The purchase
Cato Products is considering acquiring a manufacturing plant. The purchase price is $ 1,860,000. The owners believe the plant will generate net cash inflows of $ 310,000 annually. It will have to be replaced in five years. To be profitable, the investment payback must occur before the investment’s replacement date. Use the payback method to determine whether Cato Products should purchase this plant.
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