Jupiter Ltd. wants to automate one of its production processes. The new equipment will cost $90,000. In addition, Jupiter will incur installation and testing costs of $5,000 and $4,500 respectively. The expected life of the equipment is 5 years and the salvage value of the equipment is estimated at $12,000. The annual cash savings are estimated at $29,000. The company uses straight-line depreciation and has a required rate of return of 9%. Ignore income taxes. What is the payback period for the investment Jupiter Ltd. is considering?

 

 

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To calculate the payback period for the investment we need to determine how many years it will take ... View the full answer