Lazar Corporation is evaluating a proposal to invest in a machine costing $89,000. The machine has an
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Question:
Lazar Corporation is evaluating a proposal to invest in a machine costing $89,000. The machine has an estimated useful life of ten years, and an estimated salvage value of $14,000. The machine will increase the company's net income by approximately $9,600 per year. All revenue and expenses other than depreciation will be received and paid in cash.
1.The payback period of the machine is approximate:
a) 4 years
b) 8 years
c) 5 years
d) 10years
2.The expected rate of return on an average investment of the machine is
a)10%
b)17%
c)18.6%
d) 48%
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