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
Payback and ARR Each of the following scenarios is independent. All cash flows are after-tax cash...
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 $96,250. He expects to receive a net cash flow of $32,500 per year from the investment. What is the payback period for Jim? Round your answer to two decimal places. 2.96 years 2. Bertha Lafferty invested $357,500 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value The laundromat...
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