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4. (5 points) Bied's Pharmacy has purchased a small auto for delivery of prescriptions. The auto cost $28,000 and will be usable for seven years.

image text in transcribed 4. (5 points) Bied's Pharmacy has purchased a small auto for delivery of prescriptions. The auto cost $28,000 and will be usable for seven years. Delivery of prescriptions (which the pharmacy has never done before) should increase revenues by at least $25,000 per year. The cost of these prescriptions will be about $18,000 per year. The pharmacy depreciates all assets by the straight-line method. (Ignore income taxes.) Required: a. Compute the payback period on the new auto. b. Compute the simple rate of return of the new auto

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