Requirement 2: Calculate the Payback Period for the equipment supplied by Co.1 and Co.2 in the space provided. Co.1 and co.2 Equipment:Annual Depreciation Expense Amount - Amount = Amount / No. of Yrs = Annual Depreciation.Annual Cash FlowAmount + Amount = Annual Cash Flow Amount / Amount = Payback Period

Problem Information: ABC Company needs to purchase some new manufacturing equipment. Two companies, Co. 1 and Co. 2, both make and sell equipment that would be satisfactory for what ABC Company needs. ABC must decide whether the equipment from either company will be acceptable financially, and if so which company's equipment is the best choice. Information about the equipment from the two companies: Co. 1 Co. 2 Purchase Price 220,000 270,000 Useful Life in years 10 9 J/92919 10136 SunnA Salvage Value 22,000 10,000 BuisV Annual net income generated 8,500 10,100 ABC's Cost of Capital is 10% Requirement 1: Calculate the Accounting Rate of Return for the equipment supplied by van Co.1 and Co.2 in the space provided. Co. 1 Equipment: 2 bas 1 03 vd bailqque themglups er tot outsV Insan s fell erk steluolso-f Aunemariupon Numerator Denominator ontuo ness world .lesign Acct. Rate of Return Co. 2 Equipment: Numerator Denominator 301967 Vq Acct. Rate of Return