(Discounted payback period) The Callaway Cattle Company is considering the construction of a new feed handling system
Posted: Tue Apr 26, 2022 10:39 am
(Discounted payback period) The Callaway Cattle Company is
considering the construction of a new feed handling system for its
feed lot in Abilene, Kansas. The new system will provide annual
labor savings and reduced waste totaling $175,000 while the initial
investment is only $510,000. Callaway's management has used a
simple payback method for evaluating new investments in the past
but plans to calculate the discounted payback to analyze the
investment. Where the appropriate discount rate for this type of
project is 11 percent, what is the project's discounted payback
period?
considering the construction of a new feed handling system for its
feed lot in Abilene, Kansas. The new system will provide annual
labor savings and reduced waste totaling $175,000 while the initial
investment is only $510,000. Callaway's management has used a
simple payback method for evaluating new investments in the past
but plans to calculate the discounted payback to analyze the
investment. Where the appropriate discount rate for this type of
project is 11 percent, what is the project's discounted payback
period?