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Solnce55 [7]
3 years ago
10

The cost of a new machine is $250,000.

Business
1 answer:
aksik [14]3 years ago
5 0

Answer:

Initial outlay = $250,000

Annual cash inflow = 25% x $250,000 = $62,500 per annum

Payback period = <u>Initial outlay</u>

                             Annual cash inflow

                          = <u>$250,000</u>

                             $62,500

                          = 4 years

Explanation:

In this respect, there is need to calculate the annual cash inflow, which is 25% of initial outlay. Then, we will divide the initial outlay by the annual cashflow. This gives the payback period of the machine.

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