(Ignore income taxes in this problem.) A company with $675,000 in operating asse

Question

(Ignore income taxes in this problem.) A company with $675,000 in operating assets is considering the purchase of a machine that costs $77,000 and which is expected to reduce operating costs by $23,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to:

3.3 years

8.8 years

0.3 years

29.3 years

(Ignore income taxes in this problem.) A company with $675,000 in operating assets is considering the purchase of a machine that costs $77,000 and which is expected to reduce operating costs by $23,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to:

Explanation / Answer

Payback-period = 77,000/23,000 = 3.3 years. Thus, Option A.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.