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Exercise 24-3 Payback period computation; straight line depreciation LO P1 A machine can be purchased for $150,000 and used for five years, yielding the following
Exercise 24-3 Payback period computation; straight line depreciation LO P1 A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. Net income Year 1 $10,000 Year 2 $25,000 Year 3 $50,000 Year 4 $37,500 Year 5 $100,000 Compute the machine's payback period (ignore taxes). (Round payback period to 3 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow O (150,000) $ (150,000) 1 $ 2 3 10,000 25,000 50,000 37,500 100,000 4 0 5 0 Payback period
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