A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 x Year 3 57,000 26,000 83,000 130,000 × Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 years
A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $26,000. Income Year 1 $8,800 Year 2 $21,800 Year 3 $57,000 Year 4 $32,900 Year 5 $87,200 Compute the machine's payback period. (Round payback period answer to 2 decimal places.) × Answer is complete but not entirely correct. Year Net Income Depreciation Net Cash Flow Cumulative Net Cash Flow Initial invest $ (130,000) $ (130,000) Year 1 $ 8,800 $ 26,000 34,800 34,800 x Year 2 21,800 26,000 47,800 82,600 x Year 3 57,000 26,000 83,000 130,000 × Year 4 32,900 26,000 Year 5 87,200 26,000 Payback period = 2.57 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includes
annual depreciation expense of $26,000.
Income
Year 1
$8,800
Year 2
$21,800
Year 3
$57,000
Year 4
$32,900
Year 5
$87,200
Compute the machine's payback period. (Round payback period answer to 2 decimal places.)
× Answer is complete but not entirely correct.
Year
Net
Income
Depreciation
Net Cash
Flow
Cumulative Net
Cash Flow
Initial invest
$
(130,000)
$
(130,000)
Year 1
$
8,800
$
26,000
34,800
34,800 x
Year 2
21,800
26,000
47,800
82,600 x
Year 3
57,000
26,000
83,000
130,000 ×
Year 4
32,900
26,000
Year 5
87,200
26,000
Payback period =
2.57
years
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