Brewer Company is considering purchasing a machine that would cost
$752,800 and have a useful life of 12 years. The machine would reduce
cash operating costs by $94,100 per year. The machine would have a
salvage value of $107,230 at the end of the project. (Ignore income
taxes.)
Required:
a. Compute the payback period for the machine.
b. Compute the simple rate of return for the machine.
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