Payback period-deducting its straight-line depreciation

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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.

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Please I need a detailed and well explained answer. Full points would be awarded for a detailed and well explained answer

Reference no: EM13789011

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