Landmark Prints is considering an investment in new equipment costing $502,000.The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $122,000 the first year,$158,000 the second year,and $160,000 every year thereafter until the fifth year.What is the payback period for this investment? The residual value is zero.(Round your answer to two decimal places. )

Question

Quizplus · Accepted Answer

B)
 11ea86d6_826f_8068_92b6_ff92f4d6bf9d_TB2804_00 Payback = Amount invested / Expected annual net cash flow = 3 years + ($502,000 ? $440,000)/ $160,000 = 3.39 years

Landmark Prints Is Considering an Investment in New Equipment Costing