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What is the decision criteria for Payback Period (PBP) method?   A construction company is considering the purchase of a new piece of equipment. Relevant information concerning the equipment follows:   Cost of the equipment                                              $220,000               Annual cost savings from new equipment            $44,000                 Life of the new equipment                                       10 years       Compute the payback period for the equipment. If the company requires a payback period of five years or less, would the equipment be purchased?

What is the decision criteria for Payback Period (PBP) method?   A construction company is considering the purchase of a new piece of equipment. Relevant information concerning the equipment follows:   Cost of the equipment                                              $220,000               Annual cost savings from new equipment            $44,000                 Life of the new equipment                                       10 years       Compute the payback period for the equipment. If the company requires a payback period of five years or less, would the equipment be purchased?

Principles of Accounting Volume 2
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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What is the decision criteria for Payback Period (PBP) method?

 
A construction company is considering the purchase of a new piece of equipment. Relevant information concerning the equipment follows:
 
Cost of the equipment                                              $220,000            
 
Annual cost savings from new equipment            $44,000              
 
Life of the new equipment                                       10 years
 
 
 
Compute the payback period for the equipment. If the company requires a payback period of five years or less, would the equipment be purchased?
 
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