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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-line 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 $ 255,000 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 (50%) Net income 136,000 34,000 25,500 195,500 59,500 29,75e $ 29,750 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. Choose Numerator Payback Period Choose Denominator: Payback Period Payback period Red Required 2 > 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-line 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 $ 255,000 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 (50%) Net Income 136,000 34,000 25,500 195, see 59,500 29,750 $ 29,750 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 Choose Numerator Accounting Rate of Return Choose Denominaton Accounting Rate of Return Accounting role of return
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