Consideration is being given to the possible purchase of a $30,000 machine for Alo, which...
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Accounting
Consideration is being given to the possible purchase of a $30,000 machine for Alo, which is expected to result in a decrease of $12,000 per year in cash operating expenses. The machine, which has no residual value, has an estimated useful life of five years and will be depreciated on a straight-line basis. ( ignore income taxes)
a.) For the new machine, what is the simple rate of return based on initial investment?
b.) If income taxes are igored, what is the payback period for the new machine?
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