Heather company is considering the acquisition of a machine that costs $360,000. the machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $120,000, and annual operating income of $83,721.

what is the estimated cash payback period for the machine? a. 5 yearsb. 2.5 yearsc. 4.3 yearsd. 3 years

3 years

Explanation:

The cash payback period measures how long it takes for the amount invested in a project to be recouped from cumulative cash flows.

Explanations on how the payback period is calculated can be found in the attached image.

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the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20