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Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected...

Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $150,000, and annual operating income of $87,500. What is the estimated cash payback period for the machine?

A 3.5 years

B. 4.5 years

C. 5 years

D. 4 years

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Answer #1

Cash payback period= Cost of investment/annual cash flow

=675000/150000=4.5

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