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A small accounting firm is considering the purchase of a computer software package that would greatly...

A small accounting firm is considering the purchase of a computer software package that would greatly reduce the amount of time needed to prepare tax forms. The software costs $2400 and this expense will be incurred immediately. The firm estimates that it will save $650 at the end of each year beginning in one year for 7 consecutive years, and also save $1788 in year 8. What is the payback on the computer package?

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Solution :

The Payback Period on the computer package is 3.69 years.

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 9 months ago
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