The management of XYZ Beverage Company is considering to purchase a new equipment to increase the production and revenues. The useful life ofthe equipment is 10 years. Initial cost of equipment is $30.000. Expected annual cash flows from new equipment is 75.000. Annual cash Outflows are:Cost of ingredients: $45,000; Salaries expenses: $13,500; Maihtenance expenses: $1,500. Depreciation expense: $5,000. In that case what is paybacktime (as years) for this equipment?171800O A) 2,0O B) 3,5O C) 5,0O D) 4,0O E) 3,0

Payback period means the period when we get back our investment amount. Formula for payback period…

The management of XYZ Beverage Company is considering to purchase a new equipment to increase the production and revenues. The useful life of the equipment is 10 years. Initial cost of equipment is $30.000. Expected annual çash flows from new equipment is 75.000. Annual cash Outflows are = Cost of ingredients: $45,000 ; Salaries expenses: $13,500; Maihtenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment? O A) 2,0 170 O B) 3,5 O C) 5,0 OD) 4,0 O E) 3,0

The management of XYZ Beverage Company is considering to purchase a new equipment to increase the production and revenues. The useful life of the equipment is 10 years. Initial cost of equipment is $30.000. Expected annual çash flows from new equipment is 75.000. Annual cash Outflows are = Cost of ingredients: $45,000 ; Salaries expenses: $13,500; Maihtenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment? O A) 2,0 170 O B) 3,5 O C) 5,0 OD) 4,0 O E) 3,0

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

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