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How long is the payback period for company

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Reference no: EM132990881

Problem 1: A company with $800,000 in operating assets is considering purchasing a machine that costs $300,000 with an estimated salvage value of $40,000. The acquisition is expected to reduce operating costs by $55,000 in year 1, with a $5,000 increase in cost savings per year for each of the remaining years of its 6-year life. How long is the payback period?

A. 5.7 years

B. 4.7 years

C. 5.5 years

D. 4.4 years

Reference no: EM132990881

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