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XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P320,000, would increase annual

XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P320,000, would increase annual revenue by P800,000 and annual cash expenses by P70,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value.

 

REQUIRED:

1) Payback period in years

2) Payback period reciprocal

3) Accounting rate of return on initial investment

4) Accounting rate of return on average investment.

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