Fitzgerald Company is planning to acquire a $250,000 machine that will provide increased efficiencies, thereby reducing annual cash operating costs by $80,000. The machine will be depreciated by the straight line method over a five-year life with no salvage value at the end of five years. Assuming a 40% income tax rate and that cash flows occur evenly throughout the year, the machine's estimated payback period (rounded to two decimal places) is:
5.21 years.3.68 years.3.21 years.3.13 years.4.81 years.
Answer Machine's... View the full answer