Requirements

Calculate the following for the new computer system: a. payback period; and b. discounted payback period.

Question 1: Try It 21-3 (similar to) Question Help 0 Beautiful Home Company operates a number of home improvement stores in a metropolitan area. Beautiful Home's management estimates that if it invests $280,000 in a new computer system, it can save $66,000 in annual cash operating costs. The system has an expected useful life of eight years and no terminal disposal value. The required rate of return is 6%. Ignore income tax issues and assume all cash flows occur at year-end except for initial investment amounts. Future Value of $1 table Present Value of $1 table Present Value of Annuity of $1 table Future Value of Annuity of $1 table Read the requirements. a. Calculate the payback period for the new computer system. (Abbreviations used: FV = future value; PV = present value. Use factor amounts rounded to three decimal places. Round your answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) First, select the formula labels, then enter the amounts and calculate the payback period in years. Payback period