A project requires a $2,890,000 initial investment for new machinery with a five-year life and...
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Accounting
A project requires a $2,890,000 initial investment for new machinery with a five-year life and a salvage value of $318,000. The project is expected to yield annual income of $216,540 per year and net cash flows of $709,000 per year for the next five years. The projects accounting rate of return is:
Multiple Choice
24.1%.
6.3%.
13.5%.
19.8%.
47.2%.
A new manufacturing machine is expected to cost $277,200, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual income of $35,000. Annual depreciation expense is $31,000 per year. Compute the payback period for the purchase.
Multiple Choice
8.7 years.
3.8 years.
4.2 years.
7.3 years.
5.4 years.
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