70.2K

Verified Solution

Link Copied!

B2B Co is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $144,000 with a 12-year life and no salvage value. It will be depreciated on a straight line basis. The company expects to sell 57600 units of the equipment's product each year. The expected annual income related to this equipment follows $ 90,000 Sales Costa Materials, labor, and overhead (except depreciation on new equipnent) Depreciation on new equipment Setting and administrative expenses Total costs and expenses Pretax income Income taxes (30) Net income 48.000 12,000 9,000 69,000 21.000 6,300 $ 14,7ee 1. Compute the payback period. 2. Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the payback period. Payback period Choose Denominator: Choose Numerator Payback Period Payback period 0 RE1 Required 2 > B2B Co is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $144,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 57600 units of the equipment's product each year. The expected annual income related to this equipment follows. 590,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 48,269 12,000 9,000 69,000 21,000 6.300 14,700 5 1. Compute the payback period 2. Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator Choose Numerator: 1 Accounting Rate of Return Accounting rate of return 0

Answer & Explanation Solved by verified expert

See Answer