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Calculate the payback period and the accounting rate

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Lakeside, Inc., is considering replacing old production equipment with state-of-the-art technology that will allow production cost savings of $5,000 per month. The new equipment will have a five-year life and cost $210,000, with an estimated salvage value of $30,000. Lakeside's cost of capital is 9%.

Required:

Calculate the payback period and the accounting rate of return for the new production equipment. (Round your answers to 2 decimal places.)

Reference no: EM131798745

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