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Acme Company is considering replacing outdated production equipment that will allow for production cost savings of $20,000 per month. The new equipment will have a
Acme Company is considering replacing outdated production equipment that will allow for production cost savings of $20,000 per month. The new equipment will have a five-year life and cost $800,000, with an estimated salvage value of $50,000. Acme's cost of capital is 10%. Calculate the payback period and the accounting rate of return for the new production equipment.
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