Question
Vandezande Incorporated is considering the acquisition of a new machine that costs $470,000 and has a useful life of 5 years with no salvage value.
Vandezande Incorporated is considering the acquisition of a new machine that costs $470,000 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 | $ 78,000 | $ 156,000 |
| Year 2 | $ 84,000 | $ 163,000 |
| Year 3 | $ 95,000 | $ 175,000 |
| Year 4 | $ 58,000 | $ 160,000 |
| Year 5 | $ 100,000 | $ 162,000 |
Assume cash flows occur uniformly throughout a year except for the initial investment.
The payback period of this investment is closest to: (Round your answer to 1 decimal place.)
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