Describe the payback period for the machine


Major Corporation is considering the purchase of a new machine for $5,000. The machine has an estimated useful life of 5 years and no salvage value. The machine will increase Major's cash flows by $2,000 annually for 5 years. Major uses straight-line depreciation. The company's required rate of return is 10%. What is the payback period for the machine?

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Accounting Basics: Describe the payback period for the machine
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