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In: Accounting

Patterson Corp. is considering the purchase of a new piece of equipment, which would have an...

Patterson Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $528,000, a 7-year life, and $150,000 salvage value. The increase in net income each year of the equipment's life would be as follows:

Year 1 $

105,000
Year 2 $

97,000
Year 3 $

95,000
Year 4 $

84,000
Year 5 $

81,000
Year 6 $

76,000
Year 7 $

70,000


What is the payback period?

Multiple Choice

  • 5.92 years

  • 6.13 years

  • 3.77 years

  • 3.50 years

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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