A company is considering an investment in equipment that can produce more efficiently than the current technology. The investment required is P2,500,000. The equipment is expected to last for 5 years and can be sold for P200,000 at the end of its estimated useful life. Discount rate for this type of financing is 12%. If the investment is expected to earn revenue of P4,000,000, with cash expenses amounting to P1,500,000 each over its life, What is the payback period in years? (Answer format: 1.23) Your answer If the investment is expected to earn increase revenue by P750,000 annually with cash savings on expenses of P120,000 each over its life, what is the accounting rate of return of this investment? (Answer format: 12.34%) Your answer

A company is considering an investment in equipment that can produce more efficiently than the current technology. The investment required is P2,500,000. The equipment is expected to last for 5 years and can be sold for P200,000 at the end of its estimated useful life. Discount rate for this type of financing is 12%. If the investment is expected to earn revenue of P4,000,000, with cash expenses amounting to P1,500,000 each over its life, What is the payback period in years? (Answer format: 1.23) Your answer If the investment is expected to earn increase revenue by P750,000 annually with cash savings on expenses of P120,000 each over its life, what is the accounting rate of return of this investment? (Answer format: 12.34%) Your answer

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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