The management of XYZ Beverage Company is considering to purchase a new equipment to increase the production and revenues. The useful life of the equipment is 10 years. Initial cost of equipment is $30.000. Expected annual cash flows from new equipment is 75.000. Annual cash Outflows are : Cost of ingredients: $45,000; Salaries expenses: $13,500; Maintenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment?
The management of XYZ Beverage Company is considering to purchase a new equipment to increase the production and revenues. The useful life of the equipment is 10 years. Initial cost of equipment is $30.000. Expected annual cash flows from new equipment is 75.000. Annual cash Outflows are : Cost of ingredients: $45,000; Salaries expenses: $13,500; Maintenance expenses: $1,500. Depreciation expense: $5,000. In that case what is payback time (as years) for this equipment?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...
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