Question
5.A small accounting firm is considering the purchase of a computer software package that would greatly reduce the amount of time needed to prepare tax
5.A small accounting firm is considering the purchase of a computer software package that would greatly reduce the amount of time needed to prepare tax forms. The software costs $1750and this expense will be incurred immediately. The firm estimates that it will save $725of cash flow at the end of each year beginning in one year for4consecutive years, and also save $1994in year5. What is the payback on the computer package?
_______Years
Because payback is typically defined as an integer (e.g. 3 years and not as 3.74 years), place your answer as an integer.
6.A firm has invested $600in a new machine that is expected to last for the next7years. The machine will be depreciated on a straight line basis down to zero by the end of its7year life. The firm projects that the machine will generate consecutive annual cash inflows of $600beginning in one year and will generate consecutive annual cash outflows at300also beginning in one year.. Assuming the tax rate of38%, determine the firm's cash flow next year.
$___________
Place your answer to dollars and cents. Do not include a dollar sign or a comma in your answer.
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