# asap homework

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Question 1

Ignore income taxes in this problem.) Purvell Company has just acquired a new machine. Data on the machine follow:

 Purchase cost \$50,000 Annual cost savings \$15,000 Life of the machine 8 years

The company uses straight-line depreciation and a \$5,000 salvage value. (The company considers salvage value in making depreciation deductions.) Assume cash flows occur uniformly throughout a year.

The simple rate of return would be closest to

Question 2

(Ignore income taxes in this problem.) The Keego Company is planning a \$200,000 equipment investment that has an estimated five-year life with no estimated salvage value. The company has projected the following annual cash flows for the investment:

Year

Cash Inflows

1

\$120,000

2

60,000

3

40,000

4

40,000

5

40,000

Total

\$300,000

Assuming that the cash inflows occur evenly over the year, the payback period for the investment is _______ years.

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