JJ Corp. purchased a new machine with an estimated useful life of 5 years with no salvage value of P 45,000. The machine is expected to produce cash flow from operations, net of income taxes, as follows:1st year P 9,0004th yearP 9,0002nd year 12,0005th year 8,0003rd year15,000 JJ will use the sum-of-the-years’ digit method of depreciate the new machine in its accounting records as follows: 1st yearP15,0004th yearP 6,0002nd year12,0005th year 3,0003rd year9,000 What is the payback period?

Payback period is the period during which the initial investment in a project is recovered from its…

Answered: JJ Corp. purchased a new machine with…

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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JJ Corp. purchased a new machine with an estimated useful life of 5 years with no salvage value of P 45,000. The machine is expected to produce cash flow from operations, net of income taxes, as follows:

1^st year	P 9,000	4^th year	P 9,000
2^nd year	12,000	5^th year	8,000
3^rd year	15,000

JJ will use the sum-of-the-years’ digit method of depreciate the new machine in its accounting records as follows:

1^st year	P15,000	4^th year	P 6,000
2^nd year	12,000	5^th year	3,000
3^rd year	9,000

What is the payback period?

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