Question
A machine can be purchased for $160,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied,
A machine can be purchased for $160,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||||||||||||||
Net income |
| $ | 10,700 |
|
| $ | 26,700 |
|
| $ | 57,000 |
|
| $ | 40,100 |
|
| $ | 106,800 |
|
Compute the machines payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.)
Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow
0 (160,000) $(160,000)
1 $10,700
2 26,700
3 57,000
4 40,100
5 106,800
Payback period =
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