Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $312,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $165,488, and incur incremental cash expenses of $80,000 annually.What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.Payback periodfill in the blank 1 yearsARRfill in the blank 2% Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $312,000. It is expected togenerate $40,000 of annual cash flows, provide incremental cash revenues of $165,488, and incur incremental cash expenses of $80,000 annually.What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.Payback periodyearsARR%

= Initial InvestmentAnnual cash flows=$312,000$40,000 = 7.8 Years

Answered: Your company is planning to purchase a…

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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Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $312,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $165,488, and incur incremental cash expenses of $80,000 annually.

What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.

Payback period	fill in the blank 1 years
ARR	fill in the blank 2%

Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $312,000. It is expected to
generate $40,000 of annual cash flows, provide incremental cash revenues of $165,488, and incur incremental cash expenses of $80,000 annually.
What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.
Payback period
years
ARR
%

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