A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by $17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Cholce 5 years 9.4 years 0.2 years
A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by $17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Cholce 5 years 9.4 years 0.2 years
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by
$17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.):
(Round your answer to 1 decimal place.)
Multiple Cholce
5 years
9.4 years
0.2 years
46.8 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa4f89feb-1b0d-440d-bd79-f1d1db1e2187%2Fc4c4db54-00ff-4dc6-b31c-bab74d74731b%2F3cl2n4_processed.png&w=3840&q=75)
Transcribed Image Text:A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by
$17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.):
(Round your answer to 1 decimal place.)
Multiple Cholce
5 years
9.4 years
0.2 years
46.8 years
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