Evaluate capital expenditure proposals using payback period analysis (additional asset). (Obj. 2). An asset costing $100,000 will have an estimated net salvage value of $10,000 at the end of its 10-year life. It is expected to produce a net cash inflow, before taxes, of $20,000 per year. Straight-line depreciation will be used. The company's income tax rate is 30 percent. Compute the payback period of the proposed expenditure.

LO.1