Fire CorpIs Considering the Purchase of a New Piece of Equipment

question 89

Essay

Fire Corp.is considering the purchase of a new piece of equipment.The equipment costs $50,000 and will have a salvage value of $5,000 after nine years.Using the new piece of equipment will increase Fire's annual cash flows by $6,000.
a.What is the payback period for the new piece of equipment?
b.Suppose that the increase in cash flows was $10,000 in the first year,then decreased by $1,000 each year over the life of the equipment.What is the payback period for the equipment?

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Definitions:

Nightmare

A disturbing dream that can cause feelings of fear, distress, or anxiety, often waking the sleeper.

Monsters

Fictional creatures typically characterized by their frightening appearances or malevolent actions, often found in mythology, folklore, and horror fiction.

Sobbing

Sobbing is a type of crying characterized by deep and irregular gasps or breaths, often resulting from intense emotions such as sorrow, grief, or frustration.

Sleepwalking

A disorder occurring during deep sleep, resulting in walking or performing other complex behaviors while not fully awake.