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"Rihanna Company is considering purchasing new equipment for $379,200. It is expected that the equipment will produce net annual cash flows of $48,000 over its 10-year useful life. Annual depreciation will be $37,920. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)"

Respuesta :

Tundexi

Answer:

Cash payback period is 7.9 years

Explanation:

Payback period = Initial investment / Cash inflow per period

=$379,200 / $48,000

=7.9 years

Thus, the cash payback period is 7.9 years.

Note: It is assumed that the net annual cash flows are after considering the annual depreciation.

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