Answer:
Approximately 6 years
Step-by-step explanation:
To calculate the cash payback period, we need to determine how long it will take for the cumulative net cash inflows to equal or exceed the initial cost of the machine.
Given:
Initial cost of the machine: $546,000
Annual net cash inflow: $108,000
To find the cash payback period, we divide the initial cost by the annual net cash inflow:
Cash Payback Period = Initial Cost / Annual Net Cash Inflow
Cash Payback Period = $546,000 / $108,000
Cash Payback Period ≈ 5.0556 years
Since the payback period is calculated in years, rounding up to the nearest whole year, the estimated cash payback period for the machine is approximately 6 years.