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  3. a company is trading in a fully depreciated old as

A company is trading in a fully depreciated old asset for a new one. Cost...

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Accounting

A company is trading in a fully depreciated old asset for a new one. Cost of the new asset is $5,000 with a 5 year life and straight-line depreciation will be used. The company receives a $500 allowance for the asset traded in. Additional sales revenue from the investment will be $2,100 and expenses of $400 (excluding depreciation). The company is in a 25% tax bracket. The payback period is:

a. 7.5 years

b. 8.33 years

c. 3.46 years

d. 2.95 years

34. Given the facts in question 53, the ARR is:

a. 17.8%

b. 23.3%

c. 8.9%

d. 8%

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