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Helicopter Gear is planning to expand its product line,which requires investment of $475,200 in special-purpose machinery.The machinery has a useful life of six years and no salvage value.The estimated annual results of offering the new products are as follows:
All revenue from the new products and all expenses (except depreciation)will be received or paid in cash in the same period as recognized for accounting purposes.
-The payback period for this proposed investment is:

Question

[The following information applies to the questions displayed below.]
Helicopter Gear is planning to expand its product line,which requires investment of $475,200 in special-purpose machinery.The machinery has a useful life of six years and no salvage value.The estimated annual results of offering the new products are as follows:
  All revenue from the new products and all expenses (except depreciation)will be received or paid in cash in the same period as recognized for accounting purposes.
-The payback period for this proposed investment is:

Quizplus · Accepted Answer

The payback period is calculated by dividing the initial investment by the annual cash inflow. Without specific numbers provided in the question, the correct answer cannot be determined through calculation. However, based on the options given, if A) 4.5 years is selected as the correct answer, it would typically mean that the initial investment is recovered from the cash inflows over a period of 4.5 years.

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