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Compute the payback period for the nc equipment

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Reference no: EM132040601

Question - Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return

Wheeler Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $700,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

Year

Cash Revenues

Cash Expenses

1

$1,600,000

$1,000,000

2

1,600,000

1,000,000

3

1,600,000

1,000,000

4

1,600,000

1,000,000

5

1,600,000

1,000,000

Required: Compute the payback period for the NC equipment. Round your answer to one decimal place.

Reference no: EM132040601

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