Nullabor Park Department Is Considering a New Capital Investment

question 139

Multiple Choice

Nullabor Park Department is considering a new capital investment.The following information is available on the investment.The cost of the machine will be $144 192.The annual cost savings if the new machine is acquired will be $40 000.The machine will have a five-year life,at which time the terminal disposal value is expected to be zero.Nullabor Park is assuming no tax consequences.Nullabor Park has a 10% required rate of return.What is the payback period on this investment?

• A)3 years
• B)3.6 years
• C)4.2 years
• D)5 years

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