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Hayden Company is considering the acquisition of a machine that costs $589,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $88,000, and annual operating income of $74,800. What is the estimated cash payback period for the machine (round to one decimal points)

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Tundexi

Answer:

6.7 years

Explanation:

Cost of machine = $589,000

Annual net cash flow = $88,000

Estimated cash payback period = Cost of machine / Annual net cash flow

Estimated cash payback period = $589,000 / $88,000

Estimated cash payback period = 6.693181818181818

Estimated cash payback period = 6.7 years

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