Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $320,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $215,760, and incur incremental cash expenses of $130,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period years ARR %

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $320,000. It is expected to
generate $40,000 of annual cash flows, provide incremental cash revenues of $215,760, and incur incremental cash expenses of $130,000 annually.
What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.
Payback period
years
ARR
%
Transcribed Image Text:Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $320,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $215,760, and incur incremental cash expenses of $130,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period years ARR %
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