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A machine can be purchased for $285,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied
A machine can be purchased for $285,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Net income $12,000 Year 2 $37,000 Year 3 $59,000 Year 4 $59,000 Year 5 $139,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Annual Depr. Accumulated Beginning Depreciation at (40% of Book Book Value Value) Year-End Year Ending Book Value 1 2 3 Annual Cash Flows Depreciation Net Cash Flow Year Net income Cumulative Cash Flow $ (285,000) 0 2 / $ (285,000) 12,000 37,000 59,000 59,000 139,000 4 5 Payback period = years
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