Calculating Accounting Rate of Return, Payback Period
Midway Printing Co. is considering the purchase of new electronic printing equipment. It would allow Midway to increase its net income by $60,000 per year. Other information about this proposed project follows:
Initial investment | $300,000 |
Useful life | 5 years |
Salvage value | $100,000 |
Required:
Calculate and evaluate the following for Midway:
1.Accounting rate of return.
2.Payback period.
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