Payback, Accounting Rate of Return, Net Present value, Internal Rate of Return C

Question

Payback, Accounting Rate of Return, Net Present value, Internal Rate of Return Company wants to buy a numerically controlled (NC) machine to be used in producing spedially machined parts for manufacturers of trenching machines. The outlay required is $900,000. The NC equipment will last five years with no expected tax cash flows assodiated with the project follow: Year Cash Revenues Cash Expenses $1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 $1,500,000 ?500,000 1,500,000 1,500,000 1,500,000 Required: Compute the payback period for the tVC equipment. Round your answer to one decimal place. Payback period rears

Explanation / Answer

Annual net cash flows = 1500000-1000000 = $500000 Payback period = 900000/500000= 1.8 years

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