Q1) Machinery is expected to have useful life of 5 years with no salvage value. Depreciation is by straight-line method. In life of investment, annual net income and cash inflows are expected to be $18,000 and $48,000, respectively. Rondello has 12% cost of capital rate, which is minimum acceptable rate of return on investment.
problems:
find out (1) annual rate of return and (2) cash payback period on proposed capital expenditure.