Question

Stembridge Medical Associates is planning to acquire a $250,000 X-ray machine that promises to provide increased efficiencies and higher-resolution X-rays. The medical group expects a reduction in annual operating costs of $80,000. The machine will be depreciated by the straight-line method over five years (no half-year convention), with no salvage value at the end of five years.

Required
Compute the X-ray machine’s payback period assuming a 40 percent income tax rate.



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  • CreatedMarch 11, 2015
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