Determine payback period and the accounting rate of return

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Case A: Mama Jane's, Inc. is considering the purchase of a new oven in their pizzeria. It will cost $105,000 and generate annual cash inflows of $15,000. Determine the payback period.

Case B: Butler Company is considering the purchase of new equipment that will cost $200,000 and last 6 years. It will have a salvage value of $20,000 after 6 years. It is expected that net income will increase by $15,000 a year.

Question1 : Determining the following: the payback period? & the accounting rate of return?

Reference no: EM132517331

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