Vaughn was presented with a second capital investment that provided similar production facilities as the first one. This investment cost $405,000, has a useful life of 7 years with a salvage value of $14,000. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $26,397 and $81,000 respectively. Vaughn's 7% cost of capital is also the required rate of return on the investment. Compute the cash payback period. (Round answer to O decimal places, e.g. 25.) Cash payback period years
Vaughn was presented with a second capital investment that provided similar production facilities as the first one. This investment cost $405,000, has a useful life of 7 years with a salvage value of $14,000. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $26,397 and $81,000 respectively. Vaughn's 7% cost of capital is also the required rate of return on the investment. Compute the cash payback period. (Round answer to O decimal places, e.g. 25.) Cash payback period years
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...
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