Actol Ltd, a printing business, intends purchasing a new computerised printing machine for $800,000. The annual cash flows from the new machine are expected to be $150,000 per year. The machine has an eight-year useful life. The payback period is:

Question

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial investment by the annual cash flow. So, $800,000 / $150,000 = 5.33 years.

Actol Ltd, a Printing Business, Intends Purchasing a New Computerised