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Minnehaha Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $200,000. The equipment will have an initial cost of $1,000,000 and have an 8 year life. If there in no salvage value of the equipment, what is the payback period?

a) 1.6 years

b) 3.08 years

c) 5 years

d) 8 years

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M939275

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