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6 September, 13:57

Storax Manufacturing purchases equipment for $50,000. The equipment has an expected life of 10 years and an estimated salvage value of $2,000. Storax expects the new equipment to generate annual cost savings of $8,000. What is the payback period for the equipment

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Answers (1)
  1. 6 September, 14:22
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    6.25 years

    Explanation:

    The formula to compute the payback period is shown below:

    = Initial investment : Net cash flow

    where,

    The Initial investment is $50,000

    And, the net cash flow is $8,000

    Now put these values to the above formula

    So, the value would equal to

    = ($50,00) : ($8,000)

    = 6.25 years

    All other information which is given is not relevant. Hence, ignored it
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Home » Business » Storax Manufacturing purchases equipment for $50,000. The equipment has an expected life of 10 years and an estimated salvage value of $2,000. Storax expects the new equipment to generate annual cost savings of $8,000.
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