Required information SB Helicopter Gear is planning to expand its... The followi

Question

Required information SB Helicopter Gear is planning to expand its... The following information applies to the questions displayed below.j Helicopter Gear is planning to expand its product line, which requires investment of $474,000 in special-purpose machinery. The machinery has a useful life of six years and no salvage value. The estimated annual results of offering the new products are as follows 527,000 Revenue Expenses (Including straight-line depreciation) Increase in net income $ 26,200 All revenue from the new products and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes MC Qu. 64 The payback period for this proposed.. The payback period for this proposed investment is:

Explanation / Answer

Depeciation expense = 474000/6 = 79000

Annual cash flow = 26200+79000 = 105200

Payback period = Initial investment/annual cash flow

= 474000/105200

Payback period = 4.51 years

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