(Ignore income taxes in this problem.) 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:
Assume cash flows occur uniformly throughout a year except for the initial investment.
-The payback period of this investment is closest to:

Question

(Ignore income taxes in this problem.) 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:
  Assume cash flows occur uniformly throughout a year except for the initial investment.
-The payback period of this investment is closest to:

Quizplus · Accepted Answer

11ea7761_15be_f330_81a5_3d545111a893_TB2580_00 Year 3: $17,000 ÷ $123,000 = 0.1 (rounded)
Payback = 3.1 years

(Ignore Income Taxes in This Problem