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Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:          Year 1    $     102,000 Year 2    $     94,000 Year 3    $     92,000 Year 4    $     81,000 Year 5    $     78,000 Year 6    $     73,000 Year 7    $     67,000 What is the payback period?     Multiple Choice 6.06 years 5.39 years 5.85 years 5.88 years

Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:          Year 1    $     102,000 Year 2    $     94,000 Year 3    $     92,000 Year 4    $     81,000 Year 5    $     78,000 Year 6    $     73,000 Year 7    $     67,000 What is the payback period?     Multiple Choice 6.06 years 5.39 years 5.85 years 5.88 years

FINANCIAL ACCOUNTING
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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Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:
 

      
Year 1    $    
102,000

Year 2    $    
94,000

Year 3    $    
92,000

Year 4    $    
81,000

Year 5    $    
78,000

Year 6    $    
73,000

Year 7    $    
67,000


What is the payback period?

 

 

Multiple Choice

6.06 years


5.39 years


5.85 years


5.88 years

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