Evergreen Lawnmowers is considering the purchase of a new machine costing $814,000.The company's management is estimating that the new machine will generate additional cash inflows of $194,000 a year for ten years and have a residual value of $52,000 at the end of ten years.What is the machine's payback period? (Round your answer to two decimal places.)

Question

Quizplus · Accepted Answer

Payback period = Amount invested / Expected annual net cash flow = $814,000 / $194,000 = 4.20 years

Evergreen Lawnmowers Is Considering the Purchase of a New Machine