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Takhini Hot Springs Company has an old machine that is fully depreciated but has a current salvage value of $5000 The company wants to purchase a new machine that would cost $60000 and have

Takhini Hot Springs Company has an old machine that is fully depreciated but has a current salvage value of $5,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are: $63,000 Increased revenues Increased expenses: $20,000 9,000 12,000 Salary of additional operator Supplies Depreciation 45,000 $18,000 4,000 Maintenance Increased net income Required 1) What is the payback period on the new equipment? 2) What is the simple rate of return on the new equipment?

Mar 02 2020 View more View Less

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