Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. calculate the payback period the payback period is

Calculate the Payback Period The payback period is the length of time required for the...

50.1K

Verified Solution

Question

Accounting

image
image
Calculate the Payback Period The payback period is the length of time required for the cash to be coming in from an investment to equal the amount of cash originally spent when the investment was acquired. Assumptions 1 Purchase price of equipment $ 500,000 2 Useful life of equipment 10 years 3 Revenue the machine will generate per year $ $ 25,000 4 Direct operating costs associated with earning the revenue $ $ 121,000 5 Depreciation Expense per year $ 50,000 Using the above five assumptions, calculate how many years it will take to recoup the original investment. Step 1 Find the machine's expected net income Revenue Less: Direct Operating costs Depeciation Pavankar LBUD Using the above five assumptions, calculate how many years it will take to recoup the original investment. Step 1 Find the machine's expected net income Revenue Less: Direct Operating costs Depeciation Net Income $ B 9 Step 2 Find the net annual cash inflow the machine is expected to generate (convert net income to cash basis) 0 1 Net Income Add back Depreciation Annual Net Cash Inflow $ $ 14 15 36 7 Step 3 Compute the payback period Investment Net Annual Cash Inflow 19 50

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Civil Engineering
1.2K views

In California, medical care costs for back injuries are 43 percent higher when part of a...

Biology
1.2K views

Bacilli cocci and spirilla are terms used to describe the of bacteria a anatomy b...

Physics
1.2K views

cm and 3 cm Two wires of same length and thickness having specific resistances 6...

Physics
1.2K views

In a Quincke s tube there are two positions where sound becomes minimum the sliding...

Basic Math
1.2K views

An issue of a magazine contained the following statement. Dropping less than two inches per...

Calculus
1.2K views

Find the maximum value of s xy yz xz where x y z 24

Accounting
1.2K views

Required information {The following information applies to...

Accounting
1.2K views

Current Attempt in Progress A process with no beginning Work in Process inventory,...

Accounting
1.2K views

through 2/28/Y6) for $3,600 cash. Mima purchased 18-months insurance plan (effective 9/LY4 Q38. Indicate the...

Accounting
1.2K views

Aldean Company wants to use absorption cost-plus pricing to set the selling price on a...

Accounting
1.2K views

Aztec Company sells its product for $170 per unit. Its actual and budgeted sales follow....

Accounting
1.2K views

Tony and Suzie have purchased land for a new camp. Now they need money to...