Homework Answers
Net cash inflows after tax = Net income + Depreciation
= $20,440 + $5,400
= $25,840
Payback period = Investment / Nat cash inflows after tax
= $32,400 / $25,840
= 1.25 years
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Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $880,000 cost with an expected four-year life and a $60,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided....
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