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 cash flows from new equipment is 75.000. Annual cash Outflows are : Cost of ingredients: $45,000; Salaries expenses: $13,500; Maintenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment? O A) 3,0 B) 2,0 O C) 5,0 O D) 3,5 O E) 4,0
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 cash flows from new equipment is 75.000. Annual cash Outflows are : Cost of ingredients: $45,000; Salaries expenses: $13,500; Maintenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment? O A) 3,0 B) 2,0 O C) 5,0 O D) 3,5 O E) 4,0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 cash flows from new equipment is 75.000. Annual cash Outflows are
: Cost of ingredients: $45,000; Salaries expenses: $13,500; Maintenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback
time (as years) for this equipment?
O A) 3,0
O B) 2,0
O C) 5,0
D) 3,5
E) 4,0
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