Jericho Corporation Is Considering the Purchase of New Equipment Costing

question 92

Multiple Choice

Jericho Corporation is considering the purchase of new equipment costing initially $96,000.The equipment has an estimated life of 6 years with no salvage value.Straight-line depreciation is to be used.Net annual after tax cash flow is estimated to be $31,200 for 6 years.The payback period is:

• A)1.2300 years.
• B)3.0769 years.
• C)5.0799 years.
• D)6.0000 years.