Quary Company is considering an investment in machinery with the following information.
Initial investment $ 362,000 Materials, labor, and overhead (except depreciation) $ 81,450
Useful life 9 years Depreciation—Machinery 38,000
Salvage value $ 20,000 Selling, general, and administrative expenses 9,050
Expected sales per year 18,100 units Selling price per unit $ 10
(a) Compute the investment’s annual income and annual net cash flow.
(b) Compute the investment’s payback period.
Compute the investment’s annual income and annual net cash flow.
Annual Amounts Income Cash Flow
Expenses ____ Income ____
Net cash flow ______ Compute the payback period for this investment.
Payback Period
Numerator: / Denominator: ________ / ______ = Payback period
=