B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $312,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product - $195,000 Expenses: Materials, labor, and overhead (except depreciation) - 104,000 Depreciation-Equipment - 26,000 Selling, general, and administrative expenses - 19,500 Income $45,500 - A) Compute the annual net cash flow. B) Compute the payback period. C) Compute the accounting rate of return for this equipment.

B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $312,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product - $195,000 Expenses: Materials, labor, and overhead (except depreciation) - 104,000 Depreciation-Equipment - 26,000 Selling, general, and administrative expenses - 19,500 Income $45,500 - A) Compute the annual net cash flow. B) Compute the payback period. C) Compute the accounting rate of return for this equipment.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

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