Brutus Inc is considering the purchase of a new machine for $500,000. It is expected that the equipment will generate annual cash inflows of $100,000 and annual cash outflows of $37,500 over its 10 year life. Annual depreciation is $50,000. Compute the cash payback period.

Entry field with correct answer

4.44 years.

10 years.

8 years.

5 years.

I know the right answer is 8 years. My question is why Depreciation isnt involved in this equation and it is when you calculate NPV. Please advise.