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Exercise 24-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: a. A new operating
Exercise 24-5 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 $290,000 and have a useful life of six years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. b. A machine costs $170,000, has a $15,000 salvage value, is expected to last seven years, and will generate an after-tax income of $46,000 per year after straight-line depreciation. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period 11 a. = 0 b. 11 0
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