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Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $240,000 and

Compute the payback period for each of these two separate investments:

  1. A new operating system for an existing machine is expected to cost $240,000 and have a useful life of six years. The system yields an incremental after-tax income of $69,230 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $9,000.
  2. A machine costs $180,000, has a $13,000 salvage value, is expected to last seven years, and will generate an after-tax income of $38,000 per year after straight-line depreciation.

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Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period S O a. b.Year Cash Inflow Cumulative Net Cash Inflow (Outflow) (Outflow) 0 $ (350,000) 2 4 5 Payback period =Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate of return

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