Question
Vandezande Inc. is considering the acquisition of a new machine that costs $358,000 and has a useful life of 5 years with no salvage value.
Vandezande Inc. is considering the acquisition of a new machine that costs $358,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.):
| Incremental Net Operating Income | Incremental Net Cash Flows | |||||
| Year 1 | $ | 65,000 | $ | 147,000 | ||
| Year 2 | $ | 71,000 | $ | 150,000 | ||
| Year 3 | $ | 82,000 | $ | 181,000 | ||
| Year 4 | $ | 45,000 | $ | 147,000 | ||
| Year 5 | $ | 87,000 | $ | 149,000 | ||
Assume cash flows occur uniformly throughout a year except for the initial investment.
The payback period of this investment is closest to:
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
