Calculate payback period for proposed capital expenditure

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Problem - After-tax cash flows, payback period; even cash flows: wildlife refuge. The management of Wombat Village, a private refuge for endangered wildlife, is considering an investment in an electrified fencing system to keep out feral foxes and cats. The fences would cost $186 300 and have a useful life of seven years. The refuge's finance manager has estimated that the new fencing system will save the business $40 500 per year after taxes in security costs. The fencing system will have no salvage value. The tax rate is 36 per cent. Calculate the payback period for the proposed capital expenditure.

Reference no: EM133005142

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