Harwell Printing Co. is considering the purchase of new electronic printing equipment. It would allow Harwell to increase its net income by $45,000 per year. Other information about this pro-posed project follows:
Initial investment ..... $300,000
Useful life ........ 5 years
Salvage value ....... $100,000
Calculate and evaluate the following for Harwell:
1. Accounting rate of return.
2. Payback period.