Ataxia Fitness Center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 9 years with no salvage value at the end of the 9 years. Ataxia's internal rate of return on this equipment is 8%. Ataxia's discount rate is also 8%. The payback period on this equipment is closest to (Ignore income taxes.):
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
Multiple Choice
6.25 years
4.50 years
7.35 years
9 years
Answer: 6.25 Years
IRR Factor at 8% for 9 Years = 6.24689 = 6.25 Years
IRR Factor = Investmnet / annula Cash Flows
Payback period=Invest / annula Cash Glows
IRR Factor = Payback period.
Ataxia Fitness Center is considering an investment in some additional weight training equipment. The equipment has...
Ataxia Fitness Center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 9 years with no salvage value at the end of the 9 years. Ataxia's internal rate of return on this equipment is 8%. Ataxia's discount rate is also 8%. The payback period on this equipment is closest to (Ignore income taxes.): Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables...
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