Palmer 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 after tax of $164,800. The equipment will have an initial cost of $515,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $11,000, what is the accounting rate of return?

32.00%

49.11%

21.28%

154.37%

2. Nelson Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $108,000. The equipment will have an initial cost of $540,000 and have a 6 year life. If the salvage value of the equipment is estimated to be $83,000, what is the payback period? Ignore income taxes.

5.77 years

4.23 years

5.00 years

8.00 years

Byron Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $130,000. The equipment will have an initial cost of $525,000 and have a 5 year life. The salvage value of the equipment is estimated to be $76,000. If the hurdle rate is 10%, what is the approximate net present value? Ignore income taxes. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Round your PV factors to 4 decimal places and final answer to the nearest dollar amount.)

$14,992

$206,000

$130,000

$(32,196)