Mr. Husker’s Tuxedos Corp. ended the year 2018 with an average collection period of 37 days. The firm’s credit sales for 2018 we
1 answer:
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Answer: 0 years
Explanation:
The payback period calculates the amount of time taken to recoup the initial investment made in a project or in the purchase of a machine or building. It calculates how long the cumulative cash flow generated from a project equals the cost of the project.
The payback period for both machines are zero years because the cumulative cash flow is less than the cost of the machine.
For machine A - cumulative cash flow- $-47,000 is less than -$71,000
For machine B - cumulative cash flow, -$7,000 is less than -$52,000
Explanations on how the figures were derived is found in the attached tables.
