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B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected
B2B 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 $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 75,000 new equipment) Sales Coats Materials, labor, and overhead (except depreciation on Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (308) Net Income 40,000 10,000 7.500 57,500 17,500 5,250 12.250 $ 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. 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: I = Payback Period Payback period Required 2 > 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 Denominator: Choose Numerator: Accounting Rate of Return Accounting rate of return =
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