Tamarisk Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Old Equipment Cost Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs (a) $80,400 $40,500 8 years $10.280 $0 Cash payback period $35.800 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs Depreciation is $10,050 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800. $40,800 8 years $4,800 $29,600 Determine the cash payback period. (Ignore income taxes) (Round answer to 3 decimal places, eg 15.275) years
Tamarisk Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Old Equipment Cost Accumulated depreciation Remaining life Current salvage value Salvage value in 8 years Annual cash operating costs (a) $80,400 $40,500 8 years $10.280 $0 Cash payback period $35.800 Cost New Equipment Estimated useful life Salvage value in 8 years Annual cash operating costs Depreciation is $10,050 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value of $4,800. $40,800 8 years $4,800 $29,600 Determine the cash payback period. (Ignore income taxes) (Round answer to 3 decimal places, eg 15.275) years
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Tamarisk Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The
following information has been collected on this investment:
Cost
Old Equipment
Accumulated depreciation
Remaining life
Current salvage value
Salvage value in 8 years
Annual cash operating costs
(a)
$80,400
$40,500
8 years
$10.280
Cash payback period
$0
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$35,800
Cost
New Equipment
Depreciation is $10,050 per year for the old equipment. The straight-line depreciation method would be used for the new equipment
over an eight-year period with salvage value of $4,800.
Estimated useful life
Salvage value in 8 years
Annual cash operating costs
Determine the cash payback period. (Ignore income taxes) (Round answer to 3 decimal places, eg 15.275)
$40,800
8 years
$4,800
$29,600
years
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