A company is considering the purchase of a new piece of equipment that costs $$50,200$ and will have a salvage value of $$5,020$ after $9$ years. Using the new piece of equipment will increase annual cash flows by $$6,020.$

Required:

a$.$ What is the payback period for the new piece of equipment?

b$.$ Suppose that the increase in cash flows was $$10,020$ in the first year, then decreased by $$1,000$ each year over the life of the equipment. What is the payback period for the equipment?

Complete this question by entering your answers in the tabs below.

Required A

Required B

What is the payback period for the new piece of equipment?

Note: Found your answer to $2$ decimal places.

Payback Period

Years