Calculating Accounting Rate of Return, Payback Period
Norton Car Wash Co. is considering the purchase of a new facility. It would allow Norton to increase its net income by $90,000 per year. Other information about this proposed project follows:
Initial investment | $425,000 |
Useful life | 8 years |
Salvage value | $ 50,000 |
Required:
Calculate and evaluate the following for Norton:
1.Accounting rate of return.
2.Payback period.
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