Your company wants to buy a new rubber-stamping machine. This machine will provide the company with a new produce line, pressed rubber food trays for kitchens. Two machines are being considered: the data applicable to each machine are listed below. The company uses straight-line depreciation and expects a payback period of 5 years or less and requires a 16% return on their investment after taxes. Assume a 34% tax rate.

Using the following information for each machine, compute:

Accounting Rate of Return

Payback Period

Net Present Value

Hopewell machine - purchase price $280,000, salvage value $28,000, useful life 10 years, annual revenue generated $470,000, cash expenses annually $385,400

Walling machine - purchase price $320,000, salvage value $32,000, useful life 12 years, annual revenue generated $500,000, cash expenses annually $399,300