is this answer correct lignore Income taxes In this problem.) Baidock Inc. ls co

Question

is this answer correct

lignore Income taxes In this problem.) Baidock Inc. ls considering the acquisition of a new machine that costs $438,000 and has a useful life of 5 years wlth no salvage value. The Incremental net operating Income and Incremental net cash flows that would be produced by the machine are: Incremental Net Operating Income Cash Flows Incremental Net Year 1 Year 2 Year 3 Year 4 Year 5 $85,000 $96,000 $59,000 $101,000 $154,000 $164,000 $175,000 $161,000 $163,000 Assume cash flows occur uniformly throughout a year except for the initial investment The payback period of this investment is closest to: O 22 years O 5.0 years O 43 years 27years 8

Explanation / Answer

Payback period :

Payback period = 2 years +120000/175000 = 2.7 years

so answer is d) 2.7 years

Year Cash flow Cumulative cash flow 1 154000 154000 2 164000 318000 3 175000 493000 4 161000 654000 5 163000 817000

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

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