Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost $246,000 and have a $49,200 salvage value in five years. The annual net income from the equipment is expected to be $27,060, and depreciation is $39,360 per year. Calculate Blue Marlin's accounting rate of return and payback period for the equipment. (Do not round intermediate calculations. Round your Payback Period to 2 decimal places.) Accounting Rate of Return Payback Period Years

Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost $246,000 and have a $49,200 salvage value in five years. The annual net income from the equipment is expected to be $27,060, and depreciation is $39,360 per year. Calculate Blue Marlin's accounting rate of return and payback period for the equipment. (Do not round intermediate calculations. Round your Payback Period to 2 decimal places.) Accounting Rate of Return Payback Period Years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost $246,000 and have a $49,200 salvage
value in five years. The annual net income from the equipment is expected to be $27,060, and depreciation is $39,360 per year.
Calculate Blue Marlin's accounting rate of return and payback period for the equipment. (Do not round intermediate calculations.
Round your Payback Period to 2 decimal places.)
Accounting Rate of Return
Payback Period
%
Years

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