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A machine can be purchased for $215,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 4 $53,500 Year 1 Year 3 $50,000 Year 5 $126,000 Year 2 Net income $15,000 $38,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Ending Book Value Beginning Book Value Annual Depr. (40% of Book Value) Accumulated Year Depreciation at Year-End 1 3 4 Annual Cash Flows Cumulative Cash Flow Year Net income Net Cash Flow Depreciation 2$ (215,000) (215,000) 1 15,000 38,000 50,000 3. 50,000 50,000 4 53,500 53,500 103,500 5 126,000 126,000 229,500 Payback period = years B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $168,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 67,200 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 105,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses 56,000 14,000 10,500 80,500 24,500 Pretax income Income taxes (20%) 4,900 Net income 19,600 1. Compute the payback period. 2. Compute the accounting rate of return for this equipment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the payback period. Payback Period Choose Numerator: Choose Denominator: Payback Period Payback period Complete this question by entering your answers in the tabs below. Required 2 Required 1 Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator: Accounting Rate of Return Choose Numerator: Accounting rate of return

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