Author Question: Keltner Enterprises is considering investing in a new packing machine. The new machine will provide ... (Read 19367 times)

moore.cailinf · **on:** Feb 5, 2023

Question 1

Johnson Whole Distributors is anticipating investing in equipment that cost $120,000. The equipment has an 8-year life and no salvage value. Johnson uses straight-line depreciation. The equipment has a payback period of 5 years. The accounting rate of return is closest to
◦ 5%.
◦ 6.25%.
◦ 7.5%.
◦ 7.8%.

Question 2

Keltner Enterprises is considering investing in a new packing machine. The new machine will provide annual cash operating inflows of $12,300 for 5 years. The cost of the machine is $42,300 and it can be sold at the end of its 5-year useful life for $6,800. Keltner's required rate of return is 10%. What is the packing machine's payback period?
◦ 7.69 years
◦ 3.44 years
◦ 2.89 years
◦ 3.99 years

koung719 · **Reply #1 on:** Feb 5, 2023

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