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Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful...

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Accounting

Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful life of 8 years. The machine would reduce cash operating costs by $100,100 per year. The machine would have a salvage value of $107,290 at the end of the project. (Ignore income taxes.)

Required:

a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)

b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest whole dollar and your final answer to 2 decimal places.)

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\begin{tabular}{|l|l|l|} \hline a. Payback period & & years \\ \hline b. Simple rate of return & & % \\ \hline \end{tabular}

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