chapter 24

Project A requires a $290,000 initial investment for new machinery. Project A is expected to yield income of $22,700 per year and net cash flow of $71,100 per year for the next five years. Compute Project A's payback period. Peng Company is considering buying a machine that will yield income of $2,200 and net cash flow of $15,000 per year for three years. The machine costs $47,100 and has an estimated $8,700 salvage value. Compute the accounting rate of return for this investment