Cardinal Pharmacy has purchased a small auto for delivery of prescriptions. The auto cost $28,000 and will be usable for four years. Delivery of prescriptions (which the pharmacy has never done before) should increase revenues by at least $40,000 per year. The cost of these prescriptions will be about $30,000 per year. The pharmacy depreciates all assets by the straight-line method.

Required:

a. Compute the payback period on the new auto.

b. Compute the simple rate of return of the new auto.

* * * Please organize your answer with schedule * * *

* * * Please organize your answer with schedule * * *

* * * Please organize your answer with schedule * * *