Respuesta :
Answer:
2.69 years
Explanation:
Payback period calculates the amount of the time it takes to recover the amount invested in a project from its cumulative cash flows.
To derive cash flows from net income, add depreciation to the net income.
Straight line depreciation = (Cost of asset - Salvage value) / useful life
$150,000 / 5 = $30,000
The depreciation expense each year would be $30,000.
Cash flow in year 1 = $30,000 + $10,000 = $40,000
Cash flow in year 2 = $30,000 + $25,000 = $55,000
Cash flow in year 3 = $30,000 + $50,000 = $80,000
Cash flow in year 4 = $30,000 + $37,500 = $67,500
Cash flow in year 5 = $30,000 + $100,000 = $130,000
In the first year, -150,000 + $40,000 = $-110,000 is recovered
In the second year, $-110,000 + $55,000 = $-55,000 is recovered
In the third year, $-55,000 + $80,000 = $25,000 is recovered.
The cash payback period is 2 years + $-55,000 / $80,000 = 2.69 years
I hope my answer helps you
The payback period is the time after the beginning of the project from which the business will earn positive returns. At the payback period, the business has incurred all its costs over the project and any further inflow of cash and returns will be considered as profit for the business.
The payback period is 2.687 years.
Computation:
[tex]\text{Payback Period}=\text{Year}+\dfrac{\text{Cash payback}}{\text{Total cash flow of next year}}\\\\=2\;\text{years}+\dfrac{-\$55,000}{\$80,000}\\\\=2\;\text{years}+0.687\\\\=2.687\;\text{years}[/tex]
Working Note:
The depreciation of the machine will be added back to the net income because the depreciation is a non-cash form of expense.
[tex]\text{Depreciation}=\dfrac{\text{Purchase cost}}{\text{Useful life}}\\\\=\dfrac{\$150,000}{5}\\\\=\$30,000[/tex]
The year from which the machine will provide positive returns is computed in the image attached below.
To know more about the payback period, refer to the link:
https://brainly.com/question/17110720
