Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Vandezande Incorporated is considering the acquisition of a new machine that costs $470,000 and has a useful
life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that
would be produced by the machine are (ignore Income taxes.):
Year 1
Year 2
Year 3
Year 4
Year 5
Incremental
Net Operating
Income
$ 78,000
$ 84,000
$ 95,000
$ 58,000
$ 100,000
Assume cash flows occur uniformly throughout a year except for the initial investment.
The payback period of this investment is closest to: (Round your answer to 1 decimal place.)
Multiple Choice
4.1 years
5.0 years
2.9 years
Incremental
Net Cash
Flows
$ 156,000
$ 163,000
$ 175,000
$ 160,000
$ 162,000
21 years
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Transcribed Image Text:Vandezande Incorporated is considering the acquisition of a new machine that costs $470,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (ignore Income taxes.): Year 1 Year 2 Year 3 Year 4 Year 5 Incremental Net Operating Income $ 78,000 $ 84,000 $ 95,000 $ 58,000 $ 100,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to: (Round your answer to 1 decimal place.) Multiple Choice 4.1 years 5.0 years 2.9 years Incremental Net Cash Flows $ 156,000 $ 163,000 $ 175,000 $ 160,000 $ 162,000 21 years
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