Question

Your company is planning to purchase a new log splitter for its lawn and garden business....

Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $256,000. It is expected to generate $40,000 of annual cash flows, provide incremental cash revenues of $161,936, and incur incremental cash expenses of $90,000 annually.

What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place.

Payback period:

ARR:

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