Problem 24-2B

Payback period, accounting rate of return, net present value, and net cash flow calculation

P1 P2 P3

Project A requires a $240,000 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year.

Annual Amounts Project A Sales of new product . .. . $250,000 Expenses Materials, labor, and overhead (except depreciation) . .. . . 115.000 Depreciation-Machinery . ... 60.000 Selling, general, and administrative expenses. . 35.100 Income. ... $ 39.900