The Riverbed Company is planning to purchase $591,800 of equipment with an estimated seven-year life...
80.2K
Verified Solution
Link Copied!
Question
Accounting
The Riverbed Company is planning to purchase $591,800 of equipment with an estimated seven-year life and no estimated salvage value. The company has projected the following annual cash flows for the investment.
Year
Projected Cash Flows
1 $235,000
2 $165,500
3 $118,500
4 $62,400
5 $62,400
6 $43,500
7 $43,500
Total $730,800
(a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year.
Payback period ______ years and ______ months
(b) If Riverbed requires a payback period of 4 years or less, should the company make this investment?
the company should / should not make the investment
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
