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Ferris Company has an old machine that is fully depreciated but has...

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Accounting

Ferris Company has an old machine that is fully depreciated but has a current salvage value of $5,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are:
Increased revenues $63,000
Increased expenses:
Salary of additional operator $20,000
Supplies 9,000
Depreciation 12,000
Maintenance 4,00045,000
Increased net income $18,000
(Ignore income taxes in this problem.)
Required:
a) What is the payback period on the new equipment?
b) What is the simple rate of return on the new equipment?

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