Due to increased demand, the management of Rani Company is considering purchasing a new computer system to decrease operating cost and sell new products. The useful life of the software is 10 years. The inflow and outflow of cash associated with the new software is given below: Initial cost of software: $37,500 Annual cash inflows: Sales: $75,000 resulting from new software Annual cash Outflows: Yearly operating costs: $45,000 Yearly salaries expenses: $19,125 Yearly maintenance expenses: $1,500 Deferred income taxes: $50O Software amortization expense: $5,000 Required: What is the project's payback period?

Due to increased demand, the management of Rani Company is considering purchasing a new computer system to decrease operating cost and sell new products. The useful life of the software is 10 years. The inflow and outflow of cash associated with the new software is given below: Initial cost of software: $37,500 Annual cash inflows: Sales: $75,000 resulting from new software Annual cash Outflows: Yearly operating costs: $45,000 Yearly salaries expenses: $19,125 Yearly maintenance expenses: $1,500 Deferred income taxes: $50O Software amortization expense: $5,000 Required: What is the project's payback period?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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