Jasper company has a payback goal of three years on acquisitions. of new equipment. anew piece of equipment that costs $450,000 and a five- year life is being considered. straight-line (sl)depreciation will be used, with zero salvage value. jasper is subject to a 30% income tax rate. to meet the company’s payback goal after-tax, the equipment must generate reductions in annual cash operating costs of:

a. $60,000

b. $114,000

c. $150,000

d. 190,000

e. $200,000

The correct answer is D.

Explanation:

Giving the following information:

Jasper company has a payback goal of three years on acquisitions. Of new equipment. Anew piece of equipment that costs $450,000 and a five- year life is being considered. Straight-line (SL)depreciation will be used, with zero salvage value. Jasper is subject to a 30% income tax rate.

Depreciation= 450,000/5= 90,000

We need to reach a net cash flow of at least $150,000

Reduction on costs= 190,000

Depreciation= 90,000 (-)

EBIT= 100,000

Tax= 30,000 (-)

Depreciation=90,000

Net operating income=  160,000

b.

c.

d.

g.

those r all of them i believe

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