Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net income by $46,800 per year. Other information about this proposed project follows: Initial investment $240,000 3 years Useful life Salvage value $105,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Harwell. (Round your percentage answer to 1 decimal place.) 2. Calculate the payback period for Harwell. (Round your answer to 2 decimal places.) 1. Accounting Rate of Return % 2. Payback Period years
Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net income by $46,800 per year. Other information about this proposed project follows: Initial investment $240,000 3 years Useful life Salvage value $105,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Harwell. (Round your percentage answer to 1 decimal place.) 2. Calculate the payback period for Harwell. (Round your answer to 2 decimal places.) 1. Accounting Rate of Return % 2. Payback Period years
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net
income by $46,800 per year. Other information about this proposed project follows:
Initial investment
Useful life
$240,000
3 years
Salvage value
$105,000
Assume straight line depreciation method is used.
Required:
1. Calculate the accounting rate of return for Harwell. (Round your percentage answer to 1 decimal place.)
2. Calculate the payback period for Harwell. (Round your answer to 2 decimal places.)
Accounting Rate of Return
Payback Period
1.
%
2
years
nces
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