# Baldock Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful...

## Question:

Baldock Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are:

Incremental Net Operating Income | Incremental Net Cash Flows | |

Year 1 | $68,000 | $151,000 |

Year 2 | $74,000 | $150,000 |

Year 3 | $85,000 | $178,000 |

Year 4 | $48,000 | $150,000 |

Year 5 | $90,000 | $152,000 |

Assuming cash flows occur uniformly throughout a year, except for the initial investment, what is the payback period of the investment?

## Calculate the Payback Period

When companies and management evaluate the viability of capital investments or projects, the accounting department and/or the cost accountant prepare estimates of how much net operating income and net cash flows the project will produce each year of the useful life of the capital asset.

## Answer and Explanation: 1

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View this answer- Assuming cash flows occur uniformly throughout a year, except for the initial investment, what is the payback period of the investment?

The payback...

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