Crane Company is considering the acquisition of a machine that costs $60,000. The machine is expected to have a useful life of 5 years, a negligible residual value, an annual cash flow of $15,000, and annual operating income of $15,000. What is the estimated cash payback period for the machine?

Question

Quizplus · Accepted Answer

The cash payback period is calculated by dividing the initial investment by the annual cash flow. Here, $60,000 / $15,000 = 4 years.

Crane Company Is Considering the Acquisition of a Machine That