Project A requires a $305,000 initial investment for new machinery with a five-year life and a salvage value of $41,500. The company uses straight-line depreciation. Project A is expected to yield annual net income of $22,800 per year for the next five years.

Compute Project A's payback period.

Payback Period
	Choose Numerator:	/	Choose Denominator:	=	Payback Period
	Cost of investment	/	Annual net cash flow	=	Payback period
				=	0

QS 24-6 Accounting rate of return LO P2

Project A requires a $385,000 initial investment for new machinery with a five-year life and a salvage value of $33,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $24,700 per year for the next five years. Compute Project As accounting rate of return.

Accounting Rate of Return
Choose Numerator:	/	Choose Denominator:	=	Accounting Rate of Return
Annual after-tax net income	/	Annual average investment	=	Accounting rate of return
				0

QS 24-7 Computation of accounting rate of return LO P2

Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The investment costs $49,000 and has an estimated $8,800 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation.

Accounting Rate of Return
Choose Numerator:	/	Choose Denominator:	=	Accounting Rate of Return
Annual after-tax net income	/	Annual average investment	=	Accounting rate of return
$3,000	/			0