Great Plains Transportation Inc. is considering acquiring equipment at a cost of $246,000. The equipment has an

Question:

Great Plains Transportation Inc. is considering acquiring equipment at a cost of $246,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $61,500. The company’s minimum desired rate of return for analysis is 10%.
Compute the following:
a. The average rate of return, giving effect to straight-line depreciation on the investment.
b. The cash payback period.
c. The . Use the table of the present value of an of $1 appearing in this chapter. Round to the nearest dollar.

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