ttps:// heducat ect html A machine can be purchased for $230,000 and used for fi

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ttps:// heducat ect html A machine can be purchased for $230,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. Net income 15,69 $38,68e $105,800 58,300 $154,488 Compute the machine's payback period (ignore taxes) (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places) Net Income Depreciation Net Cash Flow C e Cash Flow 230,000) (230,000) 15.600 38,600 105,000 58,300 154 Payback period De search

Explanation / Answer

Deprecition under straight line method = (cost - salvage value) / estimeted useful life

= (230,000 - 0) / 5 = 46,000

Pay back period = 2 years + 83,800/152,000

= 2.551 years

Year Net income Depreciation Net cash flow cummulative cash flow 0 (230,000) (230,000) 1 15,600 46,000 61,600 (168,400) 2 38,600 46,000 84,600 (83,800) 3 106,000 46,000 152,000 68,200 4 58,300 46,000 104,300 172,500 5 154,400 46,000 200,400 372,900

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