Question
An anticipated purchase of equipment for $400,000, with a useful life of 8 years and no residual value, is expected to yield the following annual
An anticipated purchase of equipment for $400,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows:
| Year | Net Income | Net Cash Flow |
| 1 | $60,000 | $110,000 |
| 2 | 50,000 | 100,000 |
| 3 | 50,000 | 100,000 |
| 4 | 40,000 | 90,000 |
| 5 | 40,000 | 90,000 |
| 6 | 40,000 | 90,000 |
| 7 | 40,000 | 90,000 |
| 8 | 40,000 | 90,000 |
What is the cash payback period?
| A. | 5 years | |
| B. | 4 years | |
| C. | 6 years | |
| D. | 3 years |
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Loose Leaf For Financial Accounting Fundamentals
Authors: John Wild, Ken Shaw, Barbara Chiappetta
6th Edition
1260151980, 978-1260151985
