### Scenario-Based Financial Calculations#### Scenario 1: Payback Period CalculationA grocery store is assessing the purchase of a new refrigeration unit with an initial investment of $412,000. The expected returns are as follows:- Year 1: $100,000- Year 2: $72,000- Year 3: $72,000- Year 4: $65,000- Year 5: $65,000- Year 6 and beyond: $38,000 annuallyTo determine the payback period, use the following formula:\[ \text{Payback period} = \boxed{\text{_____}} \text{ years} \]**Instruction:** Round your Payback Period (PB) answer to **two decimal places** (i.e., 12.34).#### Scenario 2: Accounting Rate of Return (ARR) CalculationAn auto repair company is considering a new machine to check for defective sensors, with an initial investment of $224,000. The machine is expected to generate:- Incremental revenues (including cost savings): $120,000- Incremental expenses (including depreciation): $50,000There is no salvage value. To find the accounting rate of return (ARR):\[ \text{Accounting Rate of Return (ARR)} = \boxed{\text{_____}} \]**Instruction:** Round your ARR answer, in percentage format, to **two decimal places** (i.e., 12.34%).### Summary- For the Payback Period, identify the point at which cumulative cash flows equal the initial investment.- For the Accounting Rate of Return, calculate ARR as the average annual profit divided by the initial investment, then convert the result to a percentage. These scenarios aim to illustrate practical financial decision-making processes commonly applicable in business investments.

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Solve the following three independent scenarios: A grocery store is considering the purchase of a new refrigeration unit with an initial investment of $412,000, and the store expects a return of $100,000 in year one, $72,000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period? Payback period = Round your Payback Period (PB) answer to two decimal places (i.e. 12.34). An auto repair company needs a new machine that will check for defective sensors. The machine has an initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)? Accounting Rate of Return (ARR) = years. Round your ARR answer, in percentage format, to two decimal places (i.e. 12.34%).

Solve the following three independent scenarios: A grocery store is considering the purchase of a new refrigeration unit with an initial investment of $412,000, and the store expects a return of $100,000 in year one, $72,000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period? Payback period = Round your Payback Period (PB) answer to two decimal places (i.e. 12.34). An auto repair company needs a new machine that will check for defective sensors. The machine has an initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)? Accounting Rate of Return (ARR) = years. Round your ARR answer, in percentage format, to two decimal places (i.e. 12.34%).

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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