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Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Blaylock 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 $1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1 2 3 4 5 Cash Expenses $1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Required: Compute the payback period for the NC equipment. Round your answer to one decimal place. Payback period years

Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Blaylock 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 $1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1 2 3 4 5 Cash Expenses $1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Required: Compute the payback period for the NC equipment. Round your answer to one decimal place. Payback period years

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Blaylock 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 $1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1 2 3 4 5 Cash Expenses $1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Required: Compute the payback period for the NC equipment. Round your answer to one decimal place. Payback period= years
Transcribed Image Text:Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Blaylock 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 $1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1 2 3 4 5 Cash Expenses $1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Required: Compute the payback period for the NC equipment. Round your answer to one decimal place. Payback period= years
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