Brutus Inc. is considering the purchase of a new machine for $500,000. It is expected that the equipment will generate annual cash inflows of $100,000 and annual cash outflows of $37,500 over its 10 year life. Annual depreciation is $50,000. Compute the cash payback period.
a. 10 years.
b. 4.44 years.
c. 8 years.
d. 5 years.
I know the right answer is 8 years. My question is why Depreciation isnt involved in this equation and it is when you calculate NPV. Please advise.
Answers: 1
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Brutus Inc. is considering the purchase of a new machine for $500,000. It is expected that the equip...
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