Question
Medlab Inc is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on
Medlab Inc is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment :
Depreciation is $10,090 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,600.
Determine the cash payback period. (Ignonre income taxes)
| Old Equipment | New Equipment | |||
| Cost | $80,720 | Cost | $38,400 | |
| Accumulated depreciation | $40,600 | Estimated useful life | 8 years | |
| Remaining life | 8 years | Salvage value in 8 years | $4,600 | |
| Current salvage value | $9,900 | Annual cash operating costs | $29,700 | |
| Salvage value in years | $0 | |||
| Annual cash operating costs | $35,400 |
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Internal Auditing Principles And Techniques
Authors: Richard L. Ratliff, W. Wallace, Walter B. Mcfarland, J. Loeboecke
2nd Edition
0894133268, 978-0894133268
