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History14English1Accounting3
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Adria Lopez is considering the purchase of equipment for Success Systems that would allow the company to add a new product to its coputer furniture line. The equipment is expected to cost $300,000 and to have a six-year life and no salvage value. It will be depreciated on a striaght-line basis. Success Systems expects to sell 100 unit of the equipment's product each year. The expected annual income related to this equipment follows.

Sales ...................................................................................$375,000

Costs

Materials, labor, and overhead (except depreciation) ........200,000

Depreciation on new equipment............................................ 50,000

Selling and administrative expenses .....................................37,500

Total costs and expenses ...........................................................287,500

Pretax income ...............................................................................87,500

Income taxes (30%)...................................................................... 26,250

Net income................................................................................... $61,250

Required: compute the (1) payback period and (2) accounting rate of return for this equipment. Record answers as percents, rounded to one decimal.

Please help me figure out the TABLES

Cash Flow Analysis for Proposed Equipment Investment

Business Solutions'

Cash Flow Analysis - Equipment Investment

Expected Accrual Figures

Expected Net Cash Flows

Annual Sales

Costs

Materials, labor and overhead (no depreciation)

Depreciation of new equipment

Selling and Administrative Expenses

Pretax Income

Income tax

Net Income

Annual Net Cash Flows

7.1

As computed in table 14 with the data from the cash flow analysis in table 13: the payback period (PBP) for this equipment investment would be _____years.

The accounting rate of return (ARR) on this equipment investment would be _____%.

Payback Period and Accounting Rate of Return Calculations

PBP=

ARR=

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