Question: Exercise 10-15A (Algo) Computing the payback period and unadjusted rate of return for the same investment opportunity LO 10-4 Rooney Rentals can purchase a

Exercise 10-15A (Algo) Computing the payback period and unadjusted rate of return

Exercise 10-15A (Algo) Computing the payback period and unadjusted rate of return for the same investment opportunity LO 10-4 Rooney Rentals can purchase a van that costs $132,000; it has an expected useful life of four years and no salvage value. Rooney uses straight-line depreciation. Expected revenue is $54,780 per year. Assume that depreciation is the only expense associated with this investment. Required a. Determine the payback period. Note: Round your answer to 1 decimal place. b. Determine the unadjusted rate of return based on the average cost of the investment. Note: Round your answer to 1 decimal place. (i.e., .234 should be entered as 23.4). Answer is complete but not entirely correct. a. Payback period 2.4 years b. Unadjusted rate of return 7.8 %

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