You are given the following financial data about a new system to be implemented at a company:(1) Investment cost at n = 0: $23,000(2) Investment cost at n = 1: $18,000(3) Useful life:10 years(4) Salvage value (at the end of 11 years): $7,000(5) Annual revenues: $19,000 per year(6) Annual expenses: $6,000 per year(7) MARR: 10%Note: The first revenues and expenses will occur at the end of year 2.(a) Determine the conventional-payback period.(b) Determine the discounted-payback period.
You are given the following financial data about a new system to be implemented at a company:(1) Investment cost at n = 0: $23,000(2) Investment cost at n = 1: $18,000(3) Useful life:10 years(4) Salvage value (at the end of 11 years): $7,000(5) Annual revenues: $19,000 per year(6) Annual expenses: $6,000 per year(7) MARR: 10%Note: The first revenues and expenses will occur at the end of year 2.(a) Determine the conventional-payback period.(b) Determine the discounted-payback period.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are given the following financial data about a new system to be implemented at a company:
(1) Investment cost at n = 0: $23,000
(2) Investment cost at n = 1: $18,000
(3) Useful life:10 years
(4) Salvage value (at the end of 11 years): $7,000
(5) Annual revenues: $19,000 per year
(6) Annual expenses: $6,000 per year
(7) MARR: 10%
Note: The first revenues and expenses will occur at the end of year 2.
(a) Determine the conventional-payback period.
(b) Determine the discounted-payback period.
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