1.
Each of the following scenarios is independent. All cash flows are after-tax cash flows.
Required:
1. Michael Kimathi has purchased a tractor for $88,750. He expects to receive a net cash flow of $29,250 per year from the investment. What is the payback period for Michael? Round your answer to two decimal places.
fill in the blank 1 years
2. Bertha Lafferty invested $357,500 in a laundromat. The facility has a 10-year life expectancy with no expected salvage value. The laundromat will produce a net cash flow of $117,000 per year. What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as “16” in the answer box).
fill in the blank 2 %
3. Melannie Bayless has purchased a business building for $331,000. She expects to receive the following cash flows over a 10-year period:
| Year 1: $43,000 |
| Year 2: $61,000 |
| Year 3-10: $87,800 |
What is the payback period for Melannie? Round your answer to one decimal place.
fill in the blank 3 years
What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as “16” in the answer box).
fill in the blank 4 %
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