Accounting Payback Period NPV & Return on Average Investment Questions
- August 04, 2022/ Finance
Can you help me understand this Accounting question?
The Bowman Corporation is considering an investiment in a special purpose equipment to allow the company to obtain a government contract for the manufacture of a special item. The equipment cost 390,000 and would have no salvage value when the contract expires at the end of the 4 years. The estimated annual operating results are as follows.
Revenue from contract sales: $324,000
Expenses other than Depreciation:$221,000
Depreciation (Straight Line Basis) $77,250 $298,250
Increase in Net Income from contract work: $25,750
- Identify payback Period? round two decimal places
- Return on Average Investment (%) ? round 1 decimal place
- Net Present Value? round PV Factors 3 place.