The cost of the new saw to cut wood veneers is $14,000. Because of a revolutionary new cutting blade, the new saw will not cause the veneer to splinter and will make clean cuts. This clean cut will save the company $1,200 each year. Using the formula in the text, calculate the payback period for the $14,000 investment.

Question

Quizplus · Accepted Answer

To calculate the payback period, divide the initial investment ($14,000) by the annual cash inflow ($1,200 per year): 
$14,000/$1,200 = 11.67 years
Therefore, it would take around 11.67 years to recover the initial investment, making option C the best answer.

The Cost of the New Saw to Cut Wood Veneers