Answered step by step
Verified Expert Solution
Question
1 Approved Answer
X Company must purchase a new delivery truck and is using the payback method to evaluate two possible trucks. Truck 1 costs $35,000; Truck 2
X Company must purchase a new delivery truck and is using the payback method to evaluate two possible trucks. Truck 1 costs $35,000; Truck 2 costs $48,000. The useful life of both is seven years, with the following estimated operating cash flows:
Year | Truck 1 | Truck 2 |
1 | $-6,000 | $-7,000 |
2 | -8,000 | -4,000 |
3 | -8,000 | -3,000 |
4 | -8,000 | -3,000 |
5 | -6,000 | -3,000 |
6 | -5,000 | -2,000 |
7 | -4,000 | -2,000 |
If X Company chooses Truck 2 instead of Truck 1, what is the payback period (in years)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started