6.00 points Bartlett Car Wash Co. is considering the purchase of a new facility.

Question

6.00 points Bartlett Car Wash Co. is considering the purchase of a new facility. It would allow Barlett to increase its net income by $91,405 per year. Other information about this proposed project follows: Initial investment Useful life Salvage value $433,200 8 years 58,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. (Round your percentage answer to 2 decimal places.) g Rate of Retum 2. Calculate the payback period for Bartlett. (Round your answer to 2 decimal places.) Period years Hints References eBook & Resources

Explanation / Answer

1 Accounting rate of return = 91405/433200= 21.1% 2 Annual depreciation=(433200-58000)/8= $46900 Payback period=433200/(91405+46900)= 3.13 years

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