Azimuth Company was considering the purchase of equipment. Details on the equipment are as follows: Year Original Investment Cash Flow 0 $200,000 1 $ 40,000 2 40,000 3 60,000 4 40,000 5 60,000 6 30,000 What is the payback period in years, assuming no taxes are paid?
Azimuth Company was considering the purchase of equipment. Details on the equipment are as follows: Year Original Investment Cash Flow 0 $200,000 1 $ 40,000 2 40,000 3 60,000 4 40,000 5 60,000 6 30,000 What is the payback period in years, assuming no taxes are paid?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Azimuth Company was considering the purchase of equipment. Details on the equipment are as follows:
|
Year |
Original Investment |
Cash Flow |
|
0 |
$200,000 |
|
|
1 |
$ 40,000 |
|
|
2 |
40,000 |
|
|
3 |
60,000 |
|
|
4 |
40,000 |
|
|
5 |
60,000 |
|
|
6 |
30,000 |
What is the payback period in years, assuming no taxes are paid?
Group of answer choices
5.00
4.00
3.85
4.33
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