Asked by
Vishnu Vadan
on Oct 10, 2024
Verified
In calculating the payback period where new equipment is replacing old equipment, any salvage value to be received on disposal of the old equipment should be deducted from the cost of the new equipment.
Payback Period
The time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.
Salvage Value
The estimated resale value of an asset at the end of its useful life.
- Learn the principles of the payback period technique and its restrictions for investment determinations.
- Understand the treatment of depreciation and working capital in cash flow computations.
Verified Answer
KG
Learning Objectives
- Learn the principles of the payback period technique and its restrictions for investment determinations.
- Understand the treatment of depreciation and working capital in cash flow computations.