Solution-Compute the payback period for each of these two

Compute the payback period for each of these two separate

Reference no: EM13906231

Compute the payback period for each of these two separate investments (round the payback period to two decimals):

a. A new operating system for an existing machine is expected to cost $ 520,000 and have a useful life of six years. The system yields an incremental after tax income of $ 150,000 each year after deducting its straight line depreciation. The predicted salvage value of the system is $ 10,000.

b. A machine costs $ 380,000, has a $ 20,000 salvage value, is expected to last eight years, and will generate an after tax income of $ 60,000 per year after straight line depreciation.

Reference no: EM13906231

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Compute the payback period for each of these two separate

Reference no: EM13906231

Reference no: EM13906231

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