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B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $480.000
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $480.000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows Sales of new product $ 300,000 Expenses Materials, labor, and overhead (except depreciation) 160,000 Depreciation Equipment 10,00 Selling, general, and administrative expenses 30,000 Income $70,000 (6) Compute the annual net cash flow (b) Compute the payback period (c) Compute the accounting rate of return for this equiment Required A Required B Required Compute the annual net cash flow. Annual Net Cash Flow Net cash flow Compute the payback period. Numerator: Payback Period Denominator Payback period Compute the accounting rate of return for this equipment. Numerator: Accounting Rate of Return Denominator Accounting rate of retum
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