Determine the payback period (in years, round-off to 5 decimal places) at an interest rate of 10% per year for an asset that initially cost $30,000, has a scrap value of $1,700 whenever it is sold, and generates cash flow of $3,100 per year.

Determine the payback period (in years, round-off to 5 decimal places) at an interest rate of 10% per year for an asset that initially cost $30,000, has a scrap value of $1,700 whenever it is sold, and generates cash flow of $3,100 per year.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 19E

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Determine the payback period (in years, round-off to 5 decimal places) at an interest rate of
10% per year for an asset that initially cost $30,000, has a scrap value of $1,700 whenever it
is sold, and generates cash flow of S3,100 per year.

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