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Determine the payback period reciprocal

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Question - Capital Budgeting - XYZ Company is looking to invest in some new machinery to replace its current malfunctioning one. The new machine, which costs P420,000, would increase annual revenue by P200,000 and annual cash expenses by P50,000. The machine is estimated to have a useful life of 12 years and P30,000 salvage value.

Required -

A. Determine the payback period in years.

B. Determine the payback period reciprocal.

C. Determine the accounting rate of return on initial investment.

D. Determine the accounting rate of return on average investment.

Reference no: EM133094695

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