a. Find the accounting return on investment for a project that costs $10,000, will have no salvage

Question:

a. Find the accounting return on investment for a project that costs $10,000, will have no salvage value, and has expected annual after-tax profits of $1,000.

b. Determine the payback period for a capital investment that costs $40,000 and has the following after-tax profit. (The project outlay of $40,000 will be depreciated on a straight-line basis over seven years to a zero salvage value.)

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...