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What is the accounting rate of return

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Question - Wolverine Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $50,100. The equipment will have an initial cost of $601,000 and have a 8-year life. The equipment has no salvage value. The hurdle rate is 10%. Ignore income taxes.

Required -

a. What is the accounting rate of return?

b. What is the payback period?

c. What is the net present value?

d. What would the net present value be with a 14% hurdle rate?

Reference no: EM132613279

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