Exercise 11-5 Payback period computation; even cash flows LO P1

Compute the payback period for each of these two separate investments:

1. A new operating system for an existing machine is expected to cost $280,000 and have a useful life of six years. The system yields an incremental after-tax income of $80,769 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000.
2. A machine costs $190,000, has a $15,000 salvage value, is expected to last ten years, and will generate an after-tax income of $44,000 per year after straight-line depreciation.

Payback Period Choose Numerator:Choose Denominator: Payback Period Payback period a. b