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melisa1 [442]
3 years ago
11

Metlock Company has identified that the cost of a new computer will be $44000, but with the use of the new computer, net income

will increase by $5000 a year. If depreciation expense is $3000 a year, the cash payback period is:_______
a. 22.0 years.
b. 5.5 years.
c. 8.8 years.
d. 14.7 years.
Business
1 answer:
arlik [135]3 years ago
8 0

Answer:

c

Explanation:

Cash payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.

Cash payback period = amount invested / cash flows

Cash flows = net income + depreciation = $5000 + $3000 = $8000

$44,000 / $8,000 = 5.5 years

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