None A company with $720,000 in operating assets is considering the purchase of amachine that costs $80,000 and which is expected to reduce operating costs by$26,000 each year. These reductions in cost occur evenly throughout the year. Thepayback period for this machine in years is closest to (Ignore income taxes.): (Roundyour answer to 1 decimal place.)9 years0.33 years3.1 years27.7 years

The payback period is one of the techniques used in capital budgeting to find out the time required…

Answered: mpany with $720,000 in operating assets…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

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This asset is similar across other asset replacement questions: An asset has a first cost of $70,000. In the first year the asset loses $20,000 in value, and then falls in value by 20% per year thereafter. Operating and Maintenance costs are $20,000 in the first year and increases by $5000 per year each year going forward. MARR = 10%. Find the EAC for N=5. The answer is within $500 of which of the following?

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