G Chapter 11 Qaz CO erto.mheducation.comhm.tpr | Question 5 (of 5. ignore income
ID: 341766 • Letter: G
Question
G Chapter 11 Qaz CO erto.mheducation.comhm.tpr | Question 5 (of 5. ignore income taxes in this problem.) Baldock Inc. is considering the acquisition of a new machine that costs $423,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are: Incremental Net Incremental Net Cash Flows $149,000 $150,000 $178,000 $146.000 $1H8 000 Income Year 1 Year 2 Year 3 $64,.000 $70,000 44,000 $86,000 Assume cash flows ocur uniformly throughout a year except for the initial Investment The payback period of this tnvestment is closest to O 21 years O 50 years O 43 years O 27 years Type here to search F6 FB F9 8 5 6 9
Explanation / Answer
Fourth option is correct.
Explanation:
Payback period is the time period in which the initial investment is recovered.
In the given situation, payback period will be achieved in 3rd year.
Payback period=2+(423000-149000-150000)/178000 =2.70 years
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.