# Elcatire | Accounting homework help

1.value:
1.00 points
Compute the payback period for each of these two separate investments:

a.
A new operating system for an existing machine is expected to cost \$260,000 and have a useful life of four years. The system yields an incremental after-tax income of \$75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is \$10,000. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

Payback period years

b.
A machine costs \$190,000, has a \$14,000 salvage value, is expected to last seven years, and will generate an after-tax income of \$41,000 per year after straight-line depreciation. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

Payback period years

2.value:
1.00 points
A machine costs \$700,000 and is expected to yield an after-tax net income of \$30,000 each year. Management predicts this machine has a 11-year service life and a \$140,000 salvage value, and it uses straight-line depreciation. Compute this machine’s accounting rate of return. (Round your answer to the nearest whole number. Omit the “%” sign in your response.)

Accounting rate of return %

3.value:
1.00 points
K2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost \$374,400 with a 7-year life and no salvage value. It will be depreciated on a straight-line basis. K2B Co. concludes that it must earn at least a 9% return on this investment. The company expects to sell 149,760 units of the equipment’s product each year. The expected annual income related to this equipment follows. (Use Table B.3)

Sales \$ 234,000
Costs
Materials, labor, and overhead (except depreciation) 82,000
Depreciation on new equipment 53,486