Question

Vandezande Inc. is considering the acquisition of a new machine that costs $461000 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 (Ignore income taxes Incremental Net Operating Incremental Income $69,000 $75,800 586,800 $49,000 591,800 Net Cesh Flows Year 1 Year 2 Year 3 Year 4 Year 5 5149,000 $150,000 S181,000 $151,008 153,000 Assume cash flows occur uniformly throughout a year except for the initial investment The payback period of this investment is closest to Multiple Cholce 20 years 4.1 yoars 29 years 50 years

Answer 1

YearCash Flows Cumulative Cash flows 0 461000 149000 150000 181000 151000 153000 461000 312000 162000 19000 170000 323000 2 3 4 5 Payback Period -2 Years +(162000/181000) 2.9 Years Payback Period Answer

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