Evergreen Lawnmowers is considering the purchase of a new machine costing $814,000. The company's management is estimating that the new machine will generate additional cash inflows of $194,000 a year for ten years and have a residual value of $52,000 at the end of ten years. What is the machine's payback period? (Round your answer to two decimal places.)
A) 4.20 years
B) 6.37 years
C) 3.33 years
D) 5.22 years
A) 4.20 years
Payback period = Amount invested / Expected annual net cash flow = $814,000 / $194,000 = 4.20 years
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