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Alternate Exercise A Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful...

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Accounting

Alternate Exercise A Diane ManufacturingCompany is considering investing $500,000 in new equipment with anestimated useful life of 10 years and no salvage value. Theequipment is expected to produce $320,000 in cash inflows and$200,000 in cash outflows annually. The company uses straight-linedepreciation, and has a 30% tax rate.

a. Determine the annual estimated net income and net cashinflow.

b. Calculate the payback period

c. Calculate the accounting rate of return.

Answer & Explanation Solved by verified expert
4.3 Ratings (799 Votes)
aAnnual estimated net income and net cash inflow Income Statement Cash Inflows 320000 Less Cash outflows 200000 Less Depreciation    See Answer
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