View Policies

Show Attempt History

Current Attempt in Progress

Partially correct answer iconYour answer is partially correct.

The Flounder Company is planning to purchase $589,600 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
1			$216,000
2			164,500
3			119,500
4			76,800
5			76,800
6			50,500
7			50,500
Total			$754,600

(a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year.

Payback period

enter a number of years years and enter a number of months months.

(b) If Flounder requires a payback period of 4 years or less, should the company make this investment?

The company select an option should notshould make this investment