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# Payback and ARR Each of the following scenarios is independent. All cash flows are after-tax cash...

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).
%

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