A manufacturing company has an opportunity to expand its production by purchasing for tax purposes using the straight-line method over a 4-year life. The machine will a new automatic machine. The new machine costs $220,000 and is fully depreciable have s salvage value of $10,000 at the end of year 4. No additional working capital is required, and the machine will result in cost savings of $80,000 per year. The company has a tax rate of 40%. Required: Compute the following investment evaluation measures for the machine: & Payback period b. Accounting rate of return on the initial investment.

pirt2atimiautes) Gisapafacturing company has an opportunity to expand its production by purchasing 4 sew autvatic machine. The new machine costs $220,000 and is fully depreciable Ar ax numpses using the straight-line method over a 4-year life. The machine will meses salvage value of $10,000 at the end of year 4. No additional working capital is requirod, and the machine will result in cost savings of $80,000 per year. The company has a tax rate of 40%. ferairedi Compate the following investment evaluation measures for the machine: a. Rayback period b. Accounting rate of return on the initial investment. pirt2atimiautes) Gisapafacturing company has an opportunity to expand its production by purchasing 4 sew autvatic machine. The new machine costs $220,000 and is fully depreciable Ar ax numpses using the straight-line method over a 4-year life. The machine will meses salvage value of $10,000 at the end of year 4. No additional working capital is requirod, and the machine will result in cost savings of $80,000 per year. The company has a tax rate of 40%. ferairedi Compate the following investment evaluation measures for the machine: a. Rayback period b. Accounting rate of return on the initial investment