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Arvada Co is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected
Arvada Co is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $456,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 182,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 285,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 152, eee 38, eee 28, 5e8 218,5ee 66,5ee 19,950 $ 46,55 1. Compute the payback period 2. Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the payback period. Payback Period Choose Denominator Choose Numerator: Payback Period Payback period 1 = Required 2 > Arvada Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $456,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 182,400 units of the equipment's product each year. The expected annual income related to this equipment follows $ 285,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (38%) Net income 152, eee 38, eee 28,500 218,500 66,580 19,95 $ 46,55 1. Compute the payback period, 2. Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the accounting rate of return for this equipment, Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of retum 0
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