You are given the following financial data about an assembly machine to be implemented at a company: - Investment cost at year 0 (n-D0) is $22,000 - Investment cost at the end of the first year (n-1) is $18,500 - Useful life: 15 years - Salvage value (at the end of 15 years): $7,000 - Annual revenues: $18,000 per year - Annual expenses: $5,000 per year - MARR: 10% Assuming the first revenues and expenses will occur starting from the end of year 2, determine the conventional (without considering the time value of money or non-discounted) payback period.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You are given the following financial data about an assembly machine to be implemented at a
company:
Investment cost at year 0 (n3D0) is $22,000
- Investment cost at the end of the first year (n=1) is $18,500
- Useful life: 15 years
Salvage value (at the end of 15 years): $7,000
- Annual revenues: $18,000 per year
- Annual expenses: $5,000 per year
- MARR: 10%
Assuming the first revenues and expenses will occur starting from the end of year 2, determine the
conventional (without considering the time value of money or non-discounted) payback period.
4.04 years
O 4.09 years
O 4.21 years
O 4.13 years
O 3.91 years
Transcribed Image Text:You are given the following financial data about an assembly machine to be implemented at a company: Investment cost at year 0 (n3D0) is $22,000 - Investment cost at the end of the first year (n=1) is $18,500 - Useful life: 15 years Salvage value (at the end of 15 years): $7,000 - Annual revenues: $18,000 per year - Annual expenses: $5,000 per year - MARR: 10% Assuming the first revenues and expenses will occur starting from the end of year 2, determine the conventional (without considering the time value of money or non-discounted) payback period. 4.04 years O 4.09 years O 4.21 years O 4.13 years O 3.91 years
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