An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow: Year Net Income Net Cash Flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 What is the cash payback period? a.6 years b.5 years c.4 years d.3 years
An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow: Year Net Income Net Cash Flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 What is the cash payback period? a.6 years b.5 years c.4 years d.3 years
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...
Related questions
Question
100%
An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow:
What is the cash payback period?
Year | Net Income | Net Cash Flow | ||
1 | $60,000 | $120,000 | ||
2 | 50,000 | 110,000 | ||
3 | 50,000 | 110,000 | ||
4 | 40,000 | 100,000 | ||
5 | 40,000 | 60,000 | ||
6 | 40,000 | 60,000 | ||
7 | 40,000 | 60,000 | ||
8 | 40,000 | 60,000 |
What is the cash payback period?
a.6 years
b.5 years
c.4 years
d.3 years
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub