Question 9:

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Magna 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. $81,040 $40,800 Old Equipment Cost Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash ng costs New Equipment Cost Estimated useful life Salvage value in 8 years Annual cash operating costs $38,080 8 years $4,728 $29,200 8 years $10,000 $0 $35,900 Depreciation is $10,130 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 $4,728. (a) Determine the cash payback period (Ignore income taxes). (Round answer to 3 decimal places, e.g. 15.275.) Cash payback period 4.191 years