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Green Thumb Ltd, a landscaping company, is considering investing in a new lawn mower costing 10,000. The CFO estimates that the new machinery would increase annual income by approximately 2,000. What is the payback period of the investment?
Suggested Answer: C
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Payback period = Investment Cost Annual Cash Flow = 10,000 2,000 = 5 years.
25 comments · newest first
LE
Leonora
10 months ago
8,000? That’s not even a payback period!
LU
Lura
10 months ago
Wait, are we sure about those numbers? Seems off to me.
WY
Wynell
10 months ago
I thought it would be longer than that, but 5 years sounds right.
TA
Tamesha
11 months ago
The payback period is 5 years. Simple math!
ED
Edelmira
11 months ago
Definitely not 10 years, that’s way too long!
AR
Argelia
11 months ago
I thought the payback period was just a straightforward calculation, but I wonder if there are any hidden costs we should consider that might affect the actual payback time.
EM
Emily
12 months ago
I'm a bit confused about the options. I feel like 5 years makes sense, but I also remember something about considering other factors like maintenance costs.
CH
Chantell
12 months ago
I remember a similar question where we had to find the payback period, and I think it was just the investment divided by the annual cash flow. So, it should be 10,000 divided by 2,000, which is 5 years, right?
NE
Nenita
1 year ago
I think the payback period is calculated by dividing the initial investment by the annual income increase, but I'm not completely sure how to do that.
IR
Irma
1 year ago
I think I know how to do this, but I want to double-check my work. Let me walk through the steps to make sure I'm on the right track.
AD
Adela
1 year ago
Wait, how do I calculate the payback period again? I'm a little fuzzy on the formula for this type of problem.
RA
Raylene
1 year ago
I've got this! The payback period is just the initial investment divided by the annual income increase. Easy peasy.
MI
Minna
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to think through the calculation carefully to make sure I get the right answer.
PI
Pilar
1 year ago
Okay, this looks straightforward. I just need to figure out the payback period based on the initial investment and the annual income increase.
OR
Oretha
1 year ago
Ooh, this is a tricky one. I'm leaning towards C, but I might need to double-check my calculations.
DE
Deeann
1 year ago
Actually, the payback period is calculated by dividing the initial investment by the annual income increase. So, 10,000 divided by 2,000 is 5 years. So, the answer is C) 5 years.
AN
Andree
1 year ago
Hmm, I'm not so sure. Isn't it 10 years? Let me think this through again.
EM
Emerson
1 year ago
The payback period is definitely 5 years. I'm certain about that!
DI
Dick
10 months ago
Definitely 5 years, solid investment!
VA
Valentin
10 months ago
Yeah, that makes sense with the income increase.
ER
Ernest
11 months ago
I think it's 5 years too!
CA
Camellia
11 months ago
10 years seems too long for that return.
SE
Selene
1 year ago
I'm not sure, but I think it might be 20%.
TA
Tashia
1 year ago
I agree with Jesusa. The new lawn mower will bring in 2,000 extra income each year, so it will take 5 years to recoup the 10,000 investment.
JE
Jesusa
1 year ago
I think the payback period is 5 years.