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Cato Products is considering acquiring a manufacturing plant. The purchase price is $2,360,000. The owners...

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Accounting

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Cato Products is considering acquiring a manufacturing plant. The purchase price is $2,360,000. The owners believe the plant will generate net cash inflows of $295,000 annually. It will have to be replaced in seven years. To be profitable, the investment's payback period must occur before the investment's replacement date. Use the payback method to determine whether Cato Products should purchase this plant CE First enter the formula, then calculate the payback period. = Payback period Accounting rate of return Expected annual net cash inflow Future value Initial investment Net present value Present value Residual value Total net cash inflows

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