15) Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 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 Income | Incremental Net Cash Flows | |||||
Year 1 | $ | 54,000 | $ | 128,000 | ||
Year 2 | $ | 31,000 | $ | 105,000 | ||
Year 3 | $ | 52,000 | $ | 126,000 | ||
Year 4 | $ | 49,000 | $ | 123,000 | ||
Year 5 | $ | 48,000 | $ | 122,000 | ||
Assume cash flows occur uniformly throughout a year except for the initial investment.
The payback period of this investment is closest to:
Multiple Choice
2.9 years
3.1 years
5.0 years
4.9 years
year 1 | 128000 | |||
year 2 | 105000 | |||
year 3 | 126000 | |||
359000 | ||||
year 4 | 11000/123000 | |||
0.089431 | ||||
answer | 3.1 | year | ||
15) Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has...
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