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Compute the payback period

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Reference no: EM132060419

Question - Compute the payback period for each of these two separate investments:

a. A new operating system for an existing machine is expected to cost $290,000 and have a useful life of five years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000.

b. A machine costs $170,000, has a $15,000 salvage value, is expected to last seven years, and will generate an after-tax income of $46,000 per year after straight-line depreciation.

Reference no: EM132060419

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