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Exercise 24-8 Payback period and accounting rate of return on investment LO P1, P2 B2B Co. is considering the purchase of equipment that would allow
Exercise 24-8 Payback period and accounting rate of return on investment LO P1, P2 B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $336,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 134.400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 210,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (208) Net Income 112,000 28.000 21,000 161,000 49,000 9,800 39,200 $ 1. Compute the payback period. 2. Compute the accounting rate of return for this equipment Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the payback period. Choose Numerator Payback Period Choose Denominator Payback Period Payback period Required 2 > 2. compute the accounung Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator Choose Numerator: Accounting Rate of Return Accounting rate of return
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