Caliber Lawnmowers is considering the purchase of a new machine costing $804,000.The company's management is estimating that the new machine will generate additional cash flows of $180,000 a year for ten years and have a residual value of $62,000 at the end of ten years.What is the machine's payback period? (Round your answer to two decimal places.)

Question

Quizplus · Accepted Answer

A) Payback period = Amount invested / Expected annual net cash flow = $804,000 / $180,000 = 4.47 years

Caliber Lawnmowers Is Considering the Purchase of a New Machine