Return to question Exercise 11-5 Payback period computation; even cash flows LO P1 Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $260,000 and have a useful life of six years. The system ylelds an incremental after-tax Income of $75,000 each year after deducing its straight line depreciation. The predicted salage value of the system is $10,000 b. A machine costs $200.000. has a $14,000 salvage value, is expected to last seven years, and will generate an after-tax Income of $41,000 per year after straight-line depreciation Answer is complete but not entirely correct. Choose Numerator: Payback Period Payback Period 1. Choose Denominator Annual net cash flow 280,000 137.500 200.000 82,500 Cost of investment - Payback period 1.89 years 3.20 years