Bsu inc wants to purchase a new machine for 30400 excluding

Reference no: EM13581428

BSU Inc. wants to purchase a new machine for $30,400, excluding $1,200 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $7,000 each year of its economic life. The straight-line depreciation method would be used for the new machine, for a six-year period with no salvage value.

Determine the cash payback period.

Reference no: EM13581428

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