Analytical Worksheet - Question #6 Payback Period 3 4 A Hospital is trying to determine the payback period for a MRI Machine it is purchasing. The assumptions are as follows: 5 6 7 Purchase price of equipment = $1,500,000. 8 9 Useful life of the equipment = 20 years. Revenue the machine will generate per year = $22,000. Direct operating costs associated with earning revenue = $450,000 10 11 Depreciation expense per year = $140,000. 2 3 a. Find the machine's expected net income b. Find the annual cash inflow the machine is expected to generate C. Compute the payback period