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Seth Ftch owns a small retall ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involves purchasing a
Seth Ftch owns a small retall ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involves purchasing a machine that would enable Mr. Fitch to offer frozen yogurt to customers. The machine would cost $7.890 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses Aternatively. Mr. Fitch could purchase for $9,840 the equipment necessary to serve cappuccino. That equipment has an expected useful itfe of four years and no salvage value. Additional annual cash revenues and cash operating expenses assoclated with selling income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent. Required 0. Determine the payback peniod and unadjusted rate of return (use average investment) for each alternative. (Round your answers, to
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