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I need help please Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product
I need help please
Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $288,000 and to have a six-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 378,000 Sales Costs Materials, labor, and overhead (except depreciation) Depreciation on new equipment Selling and administrative expenses 194,000 48,000 36,000 Total costs and expenses 278,000 Pretax income Income taxes (35%) 100,000 35,000 Net income $ 65,000 Required: (1) Compute the payback period. Payback Period Choose Denominator: Choose Numerator: Payback Period Payback period (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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