The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 Operating Income $18,750 5 18,750 18,750 18,750 Net Cash Flow $93,750 18,750 93,750 93,750 93,750 The cash payback period for this investment is a. 4 years 93,750

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The management
of Wyoming Corporation
is considering the purchase of a new
machine costing $375,000. The company's
desired rate of return is 6%. The present
value factor for an annuity of $1 at interest
of 6% for 5 years is 4.212. In addition to the
foregoing information, use the following
data in determining the acceptability of this
investment:
Year
1
2
3
5
Operating
Income
$18,750
18,750
18,750
18,750
18,750
Net Cash
Flow
$93,750
a. 4 years
b. 20 years
c. 5 years
d. 3 years
93,750
93,750
93,750
93,750
The cash payback period for this
investment is
Transcribed Image Text:The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 5 Operating Income $18,750 18,750 18,750 18,750 18,750 Net Cash Flow $93,750 a. 4 years b. 20 years c. 5 years d. 3 years 93,750 93,750 93,750 93,750 The cash payback period for this investment is
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