Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000

Question

3 years ago

6

Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000

, and its expected life is ten years. The payback for this investment is four years. Assuming equal yearly cash inflows, what are the expected annual net cash savings from the new software? (Assume the investment has no residual value.)

Business

1 answer:

SSSSS [86.1K] · Answer 1 · 2021-12-17T23:18:03+03:00

Answer:

18,000 per year

Explanation:

investment 72,000

payback in four year thus: the project pays itself in four year.

Also as the expected annual cash savings are equal between years

we con conclude:

$\frac{investment}{regular \: cash \: flow} = payback$

72,000/ cash flow = 4

cash flow = 72,000 / 4 = 18,000

we are considering the cash savings adn depreciatin is not a monetary concept. We must ignore depreciation.

Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000​

Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000