A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includesannual depreciation expense of $26,000.IncomeYear 1$8,800Year 2$21,800Year 3$57,000Year 4$32,900Year 5$87,200Compute the machine's payback period. (Round payback period answer to 2 decimal places.)× Answer is complete but not entirely correct.YearNetIncomeDepreciationNet CashFlowCumulative NetCash FlowInitial invest$(130,000)$(130,000)Year 1$8,800$26,00034,80034,800 xYear 221,80026,00047,80082,600 xYear 357,00026,00083,000130,000 ×Year 432,90026,000Year 587,20026,000Payback period =2.57years

Step 1: The calculation of the payback ABCDE1YearIncomeDepreciationCashflowCumulative CF20 $…

Answered: A machine can be purchased for $130,000…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

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