Multiple Choice Question 55

Novak Company is considering buying a machine for $180000 with an estimated life of 10 years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $6000 each year. The cash payback on this investment is

10.00 years.

6.00 years.

15.00 years.

7.50 years.

Multiple Choice Question 43

Windsor Company is considering the purchase of a machine with an estimated useful life of 5 years with the following data:

Initial cost$110000One-time training cost13600Annual maintenance costs11000Annual cost savings55000Salvage value14300

The cash payback period is

2.28 years.

2.81 years.

2.66 years.

2.50 years.

Multiple Choice Question 54

A company is considering purchasing a machine that costs $440000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $170000 and annual operating expenses exclusive of depreciation expense are expected to be $30000. The straight-line method of depreciation would be used. The cash payback period on the machine is

2.0 years.

4.1 years.

3.1 years.

8.0 years.