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aleksklad [387]
2 years ago
5

Brutus Inc is considering the purchase of a new machine for $500,000. It is expected that the equipment will generate annual cas

h inflows of $100,000 and annual cash outflows of $37,500 over its 10 year life. Annual depreciation is $50,000. Compute the cash payback period.
Business
1 answer:
anygoal [31]2 years ago
6 0

Answer:

8 years

Explanation:

Given: Cost of new machine= $500000.

           Annual cash inflow= $100000.

           Annual cash outflow= $37500.

First, we will calculate annual payback or cash inflow.

Annual payback= (cash\ inflow - cash\ outflow)

∴Annual payback= (\$ 100000 - \$ 37500)= \$ 62500

Now computing cash payback period.

Cash payback period= \frac{initial\ investment}{annual\ payback}

Cash payback period= \frac{500000}{62500} = 8\ yrs

∴ Cash payback period is 8 years.

When payback period is short then investment is more attractive.

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Either the price level or real GDP must increase

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3 years ago
Lucas spends $83. 42 in additional interest and charges on monthly payments as the result of a prior bankruptcy. If Lucas been a
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Based on the amount saved monthly and the simple interest earned in 3 years, the amount in savings would be<u> $1,055.10.</u>

The amount saved for the year would be:

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<em>Find out more on simple interest at brainly.com/question/2294792. </em>

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