Ignore income taxes in this problem.) A company with $735,000 in operating asset
ID: 2588689 • Letter: I
Question
Ignore income taxes in this problem.) A company with $735,000 in operating assets is considering the purchase of a machine that costs $81,000 and which is expected to reduce operating costs by $27,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to:
0.33 years
9.1 years
3 years
27.2 years
Ignore income taxes in this problem.) A company with $735,000 in operating assets is considering the purchase of a machine that costs $81,000 and which is expected to reduce operating costs by $27,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to:
Explanation / Answer
Payback period for this machine = Purchase cost/Savings in costs = 81000/27000 =3 years Option 3 is correct