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15) Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage

15) Vandezande Inc. is considering the acquisition of a new machine that costs $370,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.):

Incremental Net Operating Income Incremental Net Cash Flows
Year 1 $ 54,000 $ 128,000
Year 2 $ 31,000 $ 105,000
Year 3 $ 52,000 $ 126,000
Year 4 $ 49,000 $ 123,000
Year 5 $ 48,000 $ 122,000

Assume cash flows occur uniformly throughout a year except for the initial investment.

The payback period of this investment is closest to:

Multiple Choice

  • 2.9 years

  • 3.1 years

  • 5.0 years

  • 4.9 years

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