A firm is considering an investment in new equipment that has the following information. Purchase Cost: $132,793 Salvage Value in five years time: $18,337 Useful life is 5 years and depreciation is determined using the straightline method. Expected increased annual cash flows are $52,651 What is the payback period in years? Calculate to 2 decimal places

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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A firm is considering an investment in new equipment that has the following information.

Purchase Cost: $132,793

Salvage Value in five years time: $18,337

Useful life is 5 years and depreciation is determined using the straightline method.

Expected increased annual cash flows are $52,651

What is the payback period in years? Calculate to 2 decimal places

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