1. If the investment is expected to earn revenue of P4,000,000, with cash expenses amounting to P1,500,000 each over its life, What is the payback period in years? 2. If the investment is expected to earn increase revenue by P750,000 annually with cash savings on expenses of P120,000 each over its life, what is the accounting rate of return of this investment? A company is considering an investment in equipment that canproduce more efficiently than the current technology. Theinvestment required is P2,500,000. The equipment is expected tolast for 5 years and can be sold for P200,000 at the end of itsestimated useful life. Discount rate for this type of financing is 12%.

Payback period is the period which is required for the investment or the project to get the…

Answered: If the investment is expected to earn…

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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1. If the investment is expected to earn revenue of P4,000,000, with cash expenses amounting to P1,500,000 each over its life, What is the payback period in years?

2. If the investment is expected to earn increase revenue by P750,000 annually with cash savings on expenses of P120,000 each over its life, what is the accounting rate of return of this investment?

A company is considering an investment in equipment that can
produce more efficiently than the current technology. The
investment required is P2,500,000. The equipment is expected to
last for 5 years and can be sold for P200,000 at the end of its
estimated useful life. Discount rate for this type of financing is 12%.

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