Brock and Company would like to purchase equipment for its increased demand for production. The business...

Brock and Company would like to purchase equipment for its increased demand for production. The business plans to purchase equipment with a cost of $50,000. The estimated cash inflow for each year is $11,000. The equipment has a useful life of seven years. What is the payback period?

Question 14 options:

	4.5 years
	7 years
	6.5 years
	3.5 years

Expert Solution

Payback period 4.5 Years
PBP
Time	Amount	Cumulative
-	(50,000.00)	(50,000.00)
1.00	11,000.00	(39,000.00)
2.00	11,000.00	(28,000.00)
3.00	11,000.00	(17,000.00)
4.00	11,000.00	(6,000.00)
5.00	11,000.00	5,000.00
6.00	11,000.00	16,000.00
7.00	11,000.00	27,000.00

PBP= 4 + 6,000/11,000
PBP= 4 + .55 years
Payback period = 4.5 Years

ekkarill92 answered 2 years ago

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