29 July 2010, 10:19 am
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability in this situation:In year 1, the income from operations is $18,750 and the net cash flows is $93,750. In year 2, the income from operations is $18,750 and the net cash flows is $93,750. In year 3, the income from operations is $18,750 and the net cash flows is $93,750. In year 4, the income from operations is $18,750 and the net cash flows is $93,750. In year 5, the income from operations is $18,750 and the net cash flows is $93,750.The cash payback period for this investment is: A) 3 years B) 4 years C) 5 years D) 20 years... Read More »
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