Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Brad Blaylock has purchased a tractor for $91,250. He expects to receive a net cash flow of $33,000 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places. years
Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Brad Blaylock has purchased a tractor for $91,250. He expects to receive a net cash flow of $33,000 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places. years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Payback and ARR**
Each of the following scenarios is independent. All cash flows are after-tax cash flows.
**Required:**
1. **Brad Blaylock** has purchased a tractor for $91,250. He expects to receive a net cash flow of $33,000 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places.
[Answer Box] years
2. **Bertha Lafferty** invested $372,500 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $123,000 per year. What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
[Answer Box] %
3. **Melannie Bayless** has purchased a business building for $325,000. She expects to receive the following cash flows over a 10-year period:
- Year 1: $42,000
- Year 2: $55,000
- Year 3-10: $87,400
What is the payback period for Melannie? Round your answer to one decimal place.
[Answer Box] years
What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
[Answer Box] %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F176205cf-6965-40e9-a799-ef0e1b5def40%2Ff8bf74f1-7750-4085-bf98-72fe2bc83389%2Fpswwey_processed.png&w=3840&q=75)
Transcribed Image Text:**Payback and ARR**
Each of the following scenarios is independent. All cash flows are after-tax cash flows.
**Required:**
1. **Brad Blaylock** has purchased a tractor for $91,250. He expects to receive a net cash flow of $33,000 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places.
[Answer Box] years
2. **Bertha Lafferty** invested $372,500 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $123,000 per year. What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
[Answer Box] %
3. **Melannie Bayless** has purchased a business building for $325,000. She expects to receive the following cash flows over a 10-year period:
- Year 1: $42,000
- Year 2: $55,000
- Year 3-10: $87,400
What is the payback period for Melannie? Round your answer to one decimal place.
[Answer Box] years
What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
[Answer Box] %
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