Question

7 points Check my workCheck My Work button is now disabled1Item 3 A company with $795,000 in operating assets is considering the purchase of a machine that costs $85,000 and which is expected to reduce operating costs by $17,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)

Answer 1

Answer:

5 years

Explanation:

Calculation to determine what The payback period for this machine in years is closest to

Using this formula

Payback period = Cost of asset / Xash flows

Let plug in the formula

Payback period=$85,000/ $17,000

Payback period= 5 years

Therefore The payback period for this machine in years is closest to 5 years