Compute the cash payback period

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Question - Beacon Company is considering purchasing new equipment for $355,950. The equipment has a 5-year useful life, and depreciation would be $71,190 (assuming straight-line depreciation and zero salvage value). The purchase of the equipment should increase net income by $41,800 each year for 5 years.

(a) Compute the annual rate of return.

(b) Compute the cash payback period.

Reference no: EM131798268

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