Suppose Smith Valley is deciding whether to purchase new accounting software. The payback period for the $28,575

Question:

Suppose Smith Valley is deciding whether to purchase new accounting software. The for the $28,575 software package is three years, and the software’s expected life is eight years. Smith Valley’s required rate of return is 14.0%.
Requirement
1. Assuming equal yearly cash flows, what are the expected annual cash savings from the new software?

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...