Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $204,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 annually.What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.Payback periodfill in the blank 1 yearsARRfill in the blank 2% Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $204,000. It is expected togenerate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 annually.What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.Payback periodyearsARR

working notes: Payback period = $204,000 / 30,000 = 6.8 Years 125,080-70,000 =55,080 Accounting rate…

Answered: Your company is planning to purchase a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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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 $204,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 annually.

What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.

Payback period	fill in the blank 1 years
ARR	fill in the blank 2%

Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $204,000. It is expected to
generate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 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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