Question

Your company is considering the acquisition of a machine with an initial investment of $50,000, that...

Your company is considering the acquisition of a machine with an initial investment of $50,000, that will generate the following after-tax cash flows:

year 1 $25,000

year 2 $24,000

year 3 $23,000

If the company tax rate is 20% and the cost of capital is 10%, What is the discounted payback period?

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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