Compute the payback period round your answer to 1 decimal

Assignment Help Accounting Basics

Reference no: EM13609060

Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $220,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows.

Sales...................................................................................................377,000

Costs Materials, labor, and overhead (except depreciation).............199,000

Depreciation on new equipment..................................................44,000

Selling and administrative expenses..........................................33,500

Total costs and expenses...................................................................276,500

Pretax income........................................................................................100,500

Income taxes (35%)..............................................................................35,175

Net income..............................................................................................65,325

Required: (1) Compute the payback period. (Round your answer to 1 decimal place.) Payback period ? years (2) Compute the accounting rate of return for this equipment. Accounting rate of return ? %

Reference no: EM13609060

Questions Cloud

Johnson chemical company manufactures a wide variety of : johnson chemical company manufactures a wide variety of industrial chemicals and adhesives. it purchases much of its

In the first-order spectrum maxima for two different : visible light passes through a diffraction grating that has 900 slits per centimeter and the interference pattern is

Determine the work kj performed by the piston on the : initially 0.05 kg of air is contained in a piston-cylinder device at 200 degc and 1.6 mpa. the air then expands at

Johnson chemical company manufactures a wide variety of : johnson chemical company manufactures a wide variety of industrial chemicals and adhesives. it purchases much of its

Compute the payback period round your answer to 1 decimal : santana rey is considering the purchase of equipment for business solutions that would allow the company to add a new

Your friend is getting ready to start a new business and : your friend is getting ready to start a new business and she wants to know whether she should use the cash or accrual

Draw a schematic of the turbine as a control volume label : steam having pressure 4.0 mpa and temperature of 880 k enters the turbine installed in a power plant at the rate 500

Determine the magnitude and direction of its average : a car is moving with speed 16.6 ms due south at one moment and 29.3 ms due east 9.00 seconds later. determine the

On january 1 2011 morrow inc purchased a spooler at cost of : on january 1 2011 morrow inc purchased a spooler at cost of 40000. the equipment is expected to last 8 yrs and have a

User Account

All Pages