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    Sample Calculation: Flash Company Payback Period

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    Flash Company wants to purchase a new computer that will allow the company to do in-house printing rather than sub-contract the work out to a printer. The machine will cost $45,000. FLash also believes there will be substantial savings on printing costs over the five-year life of the machine.

    Savings are anticipated at:

    Year 1 $15,000
    Year 2 $20,000
    Year 3 $40,000

    Calculate the payback period?

    I need help with entering into excel or using a HPC 12 financial calculator. Not sure where to start.

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    Solution Preview

    cost $45,000
    after one year, the payback is $15,000, so we still have 45,000 - ...