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Capital Budgeting - Payback Period question

  • 1.  Capital Budgeting - Payback Period question

    Posted 02-26-2020 05:28 PM
    Avalon Inc. is considering a new investment. The initial cost of the machinery is $184,000. Avalon expects the machinery to have a five-year useful life, with a $10,000 salvage value. Annual depreciation expense is computed as $34,800. Annual before-tax operating cash inflows are $67,000. Assume an effective tax rate of 30% and that all cash flows occur evenly throughout the year. Management has set a minimum required return of 12% for similar investments. Compute the discounted payback period in years for the potential investment


    The explanation provided for this question is extremely time consuming. Is there any easy/short-step method of computing the answer? Thanks


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    Bradley Kilbreth
    Student
    Manchester NH
    United States
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