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The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Net Cash Flow Operating Year Income 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 18,750 93,750 5 18,750 93,750 The cash payback period for this investment is a. 5 years Ob. 3 years O c. 4 years Od. 20 years

The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Net Cash Flow Operating Year Income 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 18,750 93,750 5 18,750 93,750 The cash payback period for this investment is a. 5 years Ob. 3 years O c. 4 years Od. 20 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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The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Net Cash Flow Operating Year Income 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 18,750 93,750 5 18,750 93,750 The cash payback period for this investment is a. 5 years Ob. 3 years O c. 4 years Od. 20 years
Transcribed Image Text:The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Net Cash Flow Operating Year Income 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 18,750 93,750 5 18,750 93,750 The cash payback period for this investment is a. 5 years Ob. 3 years O c. 4 years Od. 20 years
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