Solution-Calculate payback period for proposed equipment

Calculate payback period for proposed equipment purchase

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Reference no: EM133168189

Question - The Riverbed Company is planning to purchase $591,800 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment.

Year Projected Cash Flows

1 $235,000

2 165,500

3 118,500

4 62,400

5 62,400

6 43,500

7 43,500

Total $730,800

Required -

(a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year.

Payback period enter a number of years years and enter a number of months months.

(b) If Riverbed requires a payback period of 4 years or less, should the company make this investment?

The company select an option make this investment.

Reference no: EM133168189

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Calculate payback period for proposed equipment purchase

Reference no: EM133168189

Reference no: EM133168189

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