A machine can be purchased for $50,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $10,000. Income Year Initial invest Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 $3,300 Compute the machine's payback period. Note: Round payback period answer to 2 decimal places. Net Income $ Year 2 $8,300 3,300 8,300 30,000 12,400 33,200 Year 3 $30,000 Depreciation Year 4 $12,400 Net Cash Flow $ (50,000) $ Payback period = Year 5 $33,200 Cumulative Net Cash Flow (50,000) 0 0
A machine can be purchased for $50,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $10,000. Income Year Initial invest Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 $3,300 Compute the machine's payback period. Note: Round payback period answer to 2 decimal places. Net Income $ Year 2 $8,300 3,300 8,300 30,000 12,400 33,200 Year 3 $30,000 Depreciation Year 4 $12,400 Net Cash Flow $ (50,000) $ Payback period = Year 5 $33,200 Cumulative Net Cash Flow (50,000) 0 0
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 2P
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