Compute the payback period for each of these two separate investments: A new ope

Question

Compute the payback period for each of these two separate investments:    
   

A new operating system for an existing machine is expected to cost $290,000 and have a useful life of four years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

  
   

  
   

A machine costs $180,000, has a $15,000 salvage value, is expected to last eight years, and will generate an after-tax income of $46,000 per year after straight-line depreciation. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

  
     

2.

A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute this machine

a.

A new operating system for an existing machine is expected to cost $290,000 and have a useful life of four years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

Compute the payback period for each of these two separate investments: A new operating system for an existing machine is expected to cost $290,000 and have a useful life of four years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. A machine costs $180,000, has a $15,000 salvage value, is expected to last eight years, and will generate an after-tax income of $46,000 per year after straight-line depreciation. A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. 2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $369,600 with a 7-year life and no salvage value. It will be depreciated on a straight-line basis. K2B Co. concludes that it must earn at least a 10% return on this investment. The company expects to sell 147,840 units of the equipment's product each year. The expected annual income related to this equipment follows

Explanation / Answer

1) a) 13years b) 9 years 2 ) 3% 3) $54900

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