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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 $408,000 with a 12-year life and no salvage value. It will be depreciated on a straight-ine basis. The company expects to sell 163,200 units of the equipment's product each year. The expected annual income related to this equipment follows Sales Costs $ 255,000 Materials, labor, and overhead (except depreciation on new equipment) 136,000 34,000 25,500 195,500 59,500 11,900 $47,600 Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (20%) Net income 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 1Required 2 Compute the payback period Payback Period Choose Numerator Choose Denominator: Payback Period Payback period Required 1 Required 2 > Required 1Required 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 return Required 1 Required 2
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