A Company Is Considering Purchasing a Machine for $75,000

question 3

Essay

A company is considering purchasing a machine for $75,000. The machine is expected to generate a net after-tax income of $11,250 per year. Depreciation expense would be $7,500. What is the payback period for this machine?

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Definitions:

Measurement of NCI

The process of determining the value of non-controlling interests in a subsidiary, which are not owned by the parent company.

Date of Acquisition

The specific date on which control of assets and liabilities transfers from one entity to another in a business combination.

Investment

An investment refers to an asset or item acquired with the goal of generating income or appreciation in value over time.

Impaired

Refers to assets that are recognized at a value higher than their recoverable amount, leading to an impairment loss that must be recorded.