M11-5 (Algo) Calculating Accounting Rate of Return, Payback Period [LO 11-1, 11-2]
Blue Marlin Company is considering the purchase of new equipment for its factory. It will cost $259,000 and have a $51,800 salvage value in five years. The annual net income from the equipment is expected to be $31,080, and depreciation is $41,440 per year.
Required:
Calculate Blue Marlin’s accounting rate of return and payback period for the equipment.
Note: Do not round intermediate calculations. Round your Payback Period to 2 decimal places.