Heidi Company Is Considering the Acquisition of a Machine That

question 137

Multiple Choice

Heidi Company is considering the acquisition of a machine that costs $420,000. The machine is expected to have a useful life of six years, a negligible residual value, an annual net cash flow of $120,000, and annual operating income of $83,721. What is the estimated cash payback period for the machine?

• A) 3.5 years
• B) 5 years
• C) 5.1 years
• D) 4 years

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