Author Question: Welcher, Inc. plans to purchase equipment with a cost of $142,500. The company expects annual net ... (Read 84 times)

desireelg_7 · **on:** Feb 5, 2023

Question 1

Lorman Manufacturing purchases equipment with an expected life of 10 years for $50,000. The equipment has an estimated salvage value of $2,000. Lorman expects the new equipment to generate annual cost savings of $8,000. What is the payback period of the equipment?
◦ 6.50 years
◦ 6.25 years
◦ 10 years
◦ 6 years

Question 2

Welcher, Inc. plans to purchase equipment with a cost of $142,500. The company expects annual net cash inflows from the equipment of $30,000. The equipment has an estimated life of 8 years, no estimated salvage life, and a required rate of return is 6%. The payback period for the equipment is closest to
◦ 1 year.
◦ 4.8 years.
◦ 8 years.
◦ 1.5 years.

tharris7314 · **Reply #1 on:** Feb 5, 2023

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