Question

1. Payback and ARR

   Each of the following scenarios is independent. All cash flows are after-tax cash flows.

   Required:

   1. Brad Blaylock has purchased a tractor for $92,500. He expects to receive a net cash flow of $30,250 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places.
   years

   2. Bertha Lafferty invested $385,000 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $103,000 per year. What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
   %

   3. Melannie Bayless has purchased a business building for $336,000. She expects to receive the following cash flows over a 10-year period:

   Year 1: $42,500

   Year 2: $56,000

   Year 3-10: $86,400

   What is the payback period for Melannie? Round your answer to one decimal place.
   years

   What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).
   %

Check My Work

Answer 1

thale Poge Anwe alylation of Pay back fejol of Biaa Cost of Tractoy B/aylode 92500 302 per yea Apougl ah fles Total Tnityl Gejty Toue,toment Aany1 Gsh Flous Pasbqch felod Cat of Tuechov gAsoo Yeav Annugl Grh Cash Inflows 361 Jb 2 301D 30U 4 30JD 121000 Fuem the qhove tbl it is dleav that paybach perlod lie beteeen to 4yev SOce 4ptoa yead 9 r t gososhall be vecoucrd B 90 of 17so shall be ecoueved in the parxt (fachon) of the 4th 9As00 30150 3.06 yeaut

Cemety tof Accotig ai of ub Bethy laftuty of Avecage py) Empleged 3&5000 13200 2 Aveaye Accenay Piofit FLC3200)- Clacoox 10se 1gans 64 s00 Accompying Pak of Rebn AveAge Acce1nh Pafit Aveage Capisl empkge X100 192DO 33 S e 34 %% (3)Calcyleton of Payback Podel of Melnnie y Jerr Cast of Byung $330000 camoylue Gsh 3n Hoas Yeav IntHus తం 41500 2 le49o0 g400 271300 444 100 SC400 F

CI6909 foatpo R6406 783700 ban the aboue tyble It Is cleas thyt, paybach pu lie betueeg rum of f71300 shal be recoutl Bhna of $ 64700 shall be vecovercl n the mut of ction of the since upto 4 to S 4 th Jew cempytel fllow 11 36400 4.35 ye Glylation at Accouolng le of fetn Avevaye aplty! Emplogel $336000 168000 $ 789700 Nevage Accyinthy lofik 335000 gegws Accoynting 4 of Relyun 4370 100 16a000 27 %