The management of Zesty Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation: Year Operating Income Net Cash Flow 1 $100,000      $180,000      2 40,000      120,000      3 20,000      100,000      4 10,000      90,000      5 10,000      90,000      The cash payback period for this investment is

Principles of Accounting Volume 2
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Chapter11: Capital Budgeting Decisions
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The management of Zesty Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for Years 1 through 5 are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:


Year
Operating
Income
Net Cash
Flow
1 $100,000      $180,000     
2 40,000      120,000     
3 20,000      100,000     
4 10,000      90,000     
5 10,000      90,000     

The cash payback period for this investment is

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