New equipments for pay-back period

Reference no: EM13137600

The Higston Company has just purchased a piece of equipment at a cost of $500,000. This equipment will reduce operating costs by $100,000 each year for the next eight years. This equipment replaces old equipment that was sold for $10,000 cash. Ignoring income taxes, the new equipments has a pay-back period of:

A. 4.9 years.

B. 5 years.

C. 5.1 years.

D. 4.8 years.

Reference no: EM13137600

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