Return to question Exercise 24-4 Payback period; accelerated depreciation LO P1 A machine can be purchased for $215,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 $18,500 Year 2 $43,000 Year 3 $61,000 Year 4 $53,500 Year 5 $139,000 Net income Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Answer is not complete. Year Ending Book Value Computation of Annual Depreciation Expense Beginning Annual Depr. Accumulated Book (40% of Book Depreciation at Value Value) Year-End 215,000 86,000 86,000 129,000 51,600 17,200 X 77,400 30,960 48,160 46,440 18,576 66,736 27,864 27,864 94,600 129,000 77,400 46,440 27,864 Annual Cash Flows Year Net income Depreciation Net Cash Flow Cumulative Cash Flow $ (215,000) (110,500) 104,500 $ (215,000) 18,500 43,000 61,000 53 500 86,000 51,600 30,960 18 576 91,960 72 076 91,960 164 036 5 27,864 64 27,864 94,600 Annual Cash Flows Year Depreciation Net Cash Flow Cumulative Cash Flow $ (215,000) (110,500) 104,500 Net income $ (215,000) 18,500 43,000 61,000 53,500 139,000 86,000 51,600 91.960 91,960 30,960 18,576 27,864 72,076 166,864 164,036 330,900 Payback period = years