Explain the equipment is predictable to cost

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Reference no: EM13107601

B2B Co. is considering the obtaining of equipment that would allow the company to add a new product to its line. The equipment is predictable to cost $360,000 with a six-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 144,000 units of the equipment's product each year. The expected annual income related to this equipment follows. Calculate the (1) payback period and (2) accounting rate of return for this equipment.

Reference no: EM13107601

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