An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow: Year Net Income Net Cash Flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 What is the cash payback period? a.6 years b.5 years c.4 years d.3 years
An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow: Year Net Income Net Cash Flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 What is the cash payback period? a.6 years b.5 years c.4 years d.3 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
An anticipated purchase of equipment for $500,000 with a useful life of 8 years and no residual value is expected to yield the following annual net income and net cash flow :
What is the cash payback period?
| Year | Net Income | Net Cash Flow | ||
| 1 | $60,000 | $120,000 | ||
| 2 | 50,000 | 110,000 | ||
| 3 | 50,000 | 110,000 | ||
| 4 | 40,000 | 100,000 | ||
| 5 | 40,000 | 60,000 | ||
| 6 | 40,000 | 60,000 | ||
| 7 | 40,000 | 60,000 | ||
| 8 | 40,000 | 60,000 |
What is the cash payback period?
a.6 years
b.5 years
c.4 years
d.3 years
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education