Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from...
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Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $50,000. The equipment will have an initial cost of $500,000 and have an 8-year life. There is no salvage value of the equipment. The hurdle rate is 10%. Ignore income taxes. a. Calculate accounting rate of return. (Round your answer to 2 decimal places.) Rate of Return (0.25)% b. Calculate payback period. (Round your answer to one decimal place.) Payback Period 10.0 Years Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $50,000. The equipment will have an initial cost of $500,000 and have an 8-year life. There is no salvage value of the equipment. The hurdle rate is 10%. Ignore income taxes. a. Calculate accounting rate of return. (Round your answer to 2 decimal places.) Rate of Return (0.25)% b. Calculate payback period. (Round your answer to one decimal place.) Payback Period 10.0 Years
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