Caliber 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 flows 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 .A) Payback period = Amount invested / Expected annual net cash flow = $814,000 / $194,000 = 4.20 years
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