Exercise 11-5 Payback period computation

Exercise 11-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $250,000 and have a useful life of five years. The system yields an incremental after-tax income of $72,115 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. b. A machine costs $180,000, has a $13,000 salvage value, is expected to last nine years, and will generate an after-tax income of $39,000 per year after straight-line depreciation. Payback Period Choose Numerator: 1 Choose Denominator: = = Payback Period Payback period