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The Ayayai Company is planning to purchase $553,000 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the
The Ayayai Company is planning to purchase $553,000 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment. Year Projected Cash Flows $201,000 2 151,000 3 101,000 4 80,000 80,000 6 41,000 41,000 Total $695,000 (a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year. Payback period years and months
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