Question

Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 72 comma 000​, and its expected life is ten years. The payback for this investment is four years. Assuming equal yearly cash​ inflows, what are the expected annual net cash savings from the new​ software? (Assume the investment has no residual​ value.)

Answer 1

18,000 per year

Step-by-step explanation:

investment 72,000

payback in four year thus: the project pays itself in four year.

Also as the expected annual cash savings are equal between years

we con conclude:

`(investment)/(regular \: cash \: flow) = payback`

72,000/ cash flow = 4

cash flow = 72,000 / 4 = 18,000

we are considering the cash savings adn depreciatin is not a monetary concept. We must ignore depreciation.