Payback and ARR Each of the following scenarios is independent. All cash flows are after-tax cash flows. Melannie Bayless has purchased a business building for $331,000. She expects to receive the following cash flows over a 10-year period: Year 1: $43,000 Year 2: $58,500 Year 3-10: $89,000 What is the payback period for Melannie? Round your answer to one decimal place. fill in the blank What is the accounting rate of return? Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box). fill in the blank
Payback and ARR
Each of the following scenarios is independent. All cash flows are after-tax cash flows.
Melannie Bayless has purchased a business building for $331,000. She expects to receive the following cash flows over a 10-year period:
Year 1: $43,000 |
Year 2: $58,500 |
Year 3-10: $89,000 |
What is the payback period for Melannie? Round your answer to one decimal place.
fill in the blank
What is the accounting
fill in the blank
Accounting rate of return (ARR) is a recipe that mirrors the rate of return expected or required on investment, or resource, contrasted with the underlying speculation's expense. The ARR equation separates a resource's normal income by the organization's underlying speculation to determine the proportion of return that one may expect over the lifetime of the resource, or related venture. ARR doesn't consider the time estimation of cash or incomes, which can be a fundamental piece of keeping a business.
The payback period alludes to the measure of time it takes to recuperate the expense of investment. Basically, the compensation time frame is the time span a venture arrives at and earns back the original investment point.
The attractive quality of an investment or asset is straightforwardly identified with its payback period. More limited paybacks indicating more alluring investment or assets.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps