10. (Ignore income taxes in this problem.) Isomer Industrial Training Corporatio

Question

10. (Ignore income taxes in this problem.) Isomer Industrial Training Corporation is considering the purchase of new presentation equipment at a cost of $172,700. The equipment has an estimated useful life of 11 years with an expected salvage value of zero. The equipment is expected to generate net cash inflows of $35,300 per year in each of the 11 years. Isomer's discount rate is 14%. Isomer uses the straight-line method of depreciation for its assets. What is the payback period of the presentation equipment (rounded)?

A. 4.9 years

B. 6.0 years

C. 2.9 years

D. 6.4 years

Explanation / Answer

Payback period = Investment/Cash inflow per year

= 172700/35300=

4.9 years

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.