Blue Marlin Company is considering the purchase of new equipment for its factory It will cost $250,000 and have a $50,000 salvage value in five years The annual net income from the equipment is expected to be $25,000, and depreciation is $40,000 per year Calculate and evaluate Blue Marlins annual r...

Accounting Rate of Return Annual Net Income ...

Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost $250,000

Question:

Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost
$250,000 and have a $50,000 in five years. The annual net income from the equipment is expected to be $25,000, and depreciation is $40,000 per year. Calculate and evaluate Blue Marlin’s annual rate of return and for the equipment.

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,...