Question
Ocean Wave Packaging is considering a $680,000 investment in new equipment that is anticipated to produce the following data over a five-year life: Year Cash
Ocean Wave Packaging is considering a $680,000 investment in new equipment that is anticipated to produce the following data over a five-year life:
| Year | Cash Inflows | Cash Outflows | Depreciation | ||||||||
| 1 | $ | 400,000 | $ | 130,000 | $ | 110,000 | |||||
| 2 | 500,000 | 190,000 | 110,000 | ||||||||
| 3 | 500,000 | 170,000 | 110,000 | ||||||||
| 4 | 390,000 | 150,000 | 110,000 | ||||||||
| 5 | 350,000 | 130,000 | 110,000 | ||||||||
Ignoring income taxes and assuming that cash flows occur evenly throughout a year, the equipment's approximate payback period is:
Multiple Choice
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1 years 6 months.
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2 years 1 month.
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2 years 4 months.
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Over 5 years.
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None of these options is correct.
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Fundamentals of Cost Accounting
Authors: William Lanen, Shannon Anderson, Michael Maher
4th edition
78025524, 978-0078025525
