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.
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
Problem 1PS
Related questions
Question
4.21 answer is incorrect
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education