Question
An investment in a new equipment will cost $350,000. The new equipment brings in cash savings (reduced operating expenses other than depreciation) of $110,000 per
An investment in a new equipment will cost $350,000. The new equipment brings in cash savings (reduced operating expenses other than depreciation) of $110,000 per year for the next five years. The equipment will be depreciated using the straight line method with no salvage value. Assume the company does not pay any income taxes.
a) What is the annual increase in operating income from this investment?
b) What is the accounting (book) rate of return (ARR) using the AVERAGE investment? (Carry to two (2) decimals.)
c) What is the payback period for this investment? (Carry to two (2) decimals.)
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Practical Guide To Auditing SAP Systems
Authors: Martin Metz, Sebastian Mayer
1st Edition
3960126409, 978-3960126409
