First Choice Carpets is considering purchasing new weaving equipment costing $730,000. The company's management has estimated that the equipment will generate cash inflows as follows: Year 1$204,0002$204,0003$266,0004$266,0005$150,000 Considering the residual value is zero, calculate the payback period. (Round your answer to two decimal places.) A.3.70 years B.4.61 years C.3.42 years D.3.21 years

The payback period refers to the duration of time required to recover the cost of an investment. Less the payback period more the attractive investment is.Therefore, the correct option is d) 3.21 years.

Answered: First Choice Carpets is considering…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

First Choice Carpets is considering purchasing new weaving equipment costing $730,000. The company's management has estimated that the equipment will generate cash inflows as follows:

Year 1	$204,000
2	$204,000
3	$266,000
4	$266,000
5	$150,000

Considering the residual value is zero, calculate the payback period. (Round your answer to two decimal places.)

3.70 years

4.61 years

3.42 years

3.21 years

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions