A machine can be purchased for $295,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value. Net income Year 1 $21,500 Year 2 $45,000 Year 3 $79,000 Year 4 $40,000 Year 5 $113,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Annual Depr. (40% Accumulated of Book Value) Depreciation at Year-End Year Beginning Book Value Ending Book Value Annual Cash Flows Year Net income Depreciation Net Cash Flow Cumulative Cash Flow $ (295,000) S (295,000) 21,500 45,000 79,000 40.000 113,000 5 Payback period years Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $240,000 and have a useful life of four years. The system yields an incremental after-tax income of $69,230 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $9.000 b. A machine costs $170,000, has a $13,000 salvage value, is expected to last seven years, and will generate an after-tax income of $38,000 per year after straight-line depreciation. Payback Period Choose Numerator: I Choose Denominator: - Payback Period Payback period A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Management predicts this machine has a 10-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: = Accounting Rate of Return Accounting rate of return A machine can be purchased for $295,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value. Net income Year 1 $21,500 Year 2 $45,000 Year 3 $79,000 Year 4 $40,000 Year 5 $113,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Annual Depr. (40% Accumulated of Book Value) Depreciation at Year-End Year Beginning Book Value Ending Book Value Annual Cash Flows Year Net income Depreciation Net Cash Flow Cumulative Cash Flow $ (295,000) S (295,000) 21,500 45,000 79,000 40.000 113,000 5 Payback period years Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $240,000 and have a useful life of four years. The system yields an incremental after-tax income of $69,230 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $9.000 b. A machine costs $170,000, has a $13,000 salvage value, is expected to last seven years, and will generate an after-tax income of $38,000 per year after straight-line depreciation. Payback Period Choose Numerator: I Choose Denominator: - Payback Period Payback period A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Management predicts this machine has a 10-year service life and a $60,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. Accounting Rate of Return Choose Denominator: Choose Numerator: = Accounting Rate of Return Accounting rate of return