Payback PeriodAccounting Rate of Return

Each of the following scenarios is independent. Assume that all cash flows are after$-$tax cash flows.

are as follows:

c$.$ Suppose that a project has an ARR of $30\%($based on initial investment$)$ and that the average net income of the project is $$170,000.$

d$.$ Suppose that a project has an ARR of $50\%$ and that the investment is $$175,000.$

Required:

Compute the ARR on the new equipment that Cobre Company is considering. Round your answer to one decimal place.

$\%$

be preferred over the other.

ARR

Project A

Project B

Based on the ARR, Emily Hansen chosen Project A $$

How much did the company in Scenario c invest in the project? Round your answer to the nearest whole dollar.

What is the average net income earned by the project in Scenario d$?$

$$

Each of the following scenarios is independent. Assume that all cash flows are after$-$tax cash flows.

a$.$ Colby Hepworth has just invested $$500,000$ in a book and video store. She expects to receive a cash income of $$120,000$ per year from the investment.

c$.$ Carsen Nabors invested in a project that has a payback period of $4$ years. The project brings in $$960,000$ per year.

d$.$ Rahn Booth invested $$1,500,000$ in a project that pays him an even amount per year for $5$ years. The payback period is $2\mathrm{.}5$ years.

Required:

What is the payback period for Colby? Round your answer to two decimal places.

$$ years

What is the payback period for Kylie? Round your answer to one decimal place.

years

How much did Carsen invest in the project?

$

How much cash does Rahn receive each year?

$$ per year