Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows: Year 1 $ 102,000 Year 2 $ 94,000 Year 3 $ 92,000 Year 4 $ 81,000 Year 5 $ 78,000 Year 6 $ 73,000 Year 7 $ 67,000 What is the payback period? Multiple Choice 6.06 years 5.39 years 5.85 years 5.88 years
Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows: Year 1 $ 102,000 Year 2 $ 94,000 Year 3 $ 92,000 Year 4 $ 81,000 Year 5 $ 78,000 Year 6 $ 73,000 Year 7 $ 67,000 What is the payback period? Multiple Choice 6.06 years 5.39 years 5.85 years 5.88 years
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...
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Question
Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $509,000, a 7-year life, and $150,000 salvage value. The increase in
Year 1 $
102,000
Year 2 $
94,000
Year 3 $
92,000
Year 4 $
81,000
Year 5 $
78,000
Year 6 $
73,000
Year 7 $
67,000
What is the payback period?
Multiple Choice
6.06 years
5.39 years
5.85 years
5.88 years
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