A small town in Ohio is considering the purchase of a new parking system that would...
A small town in Ohio is considering the purchase of a new
parking system that would enhance the collection of parking fees
while providing additional convenience to shoppers. The hardware
requires an immediate investment of $750. The town
estimates that the new system will create an annual cash flow of
$283 to be received at the end of each year,
beginning in one year, for 5 consecutive years.
And, in addition, the project will produce a terminal cash flow in
year 6 of $383. What is the
payback, in years, of the computer package?
Years
Place your answer in number of years, as an integer.
Homework Answers
amount to be paid after 2 years
= 750 - 283 * 2
= 184
hence payback period = 2 + 184/283
= 2.65
= 3 years
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