Net present ratio and IRR. Use the information presented for Lakeside, Inc., in Mini Exercise 16.4.
In Mini Exercise 16.4, Net present value Lakeside, Inc., is considering replacing old production equipment with state of the art technology that will allow production cost savings of $10,000 per month. The new equipment will have a five year life and cost $450,000, with an estimated salvage value of $30,000. Lakeside's cost of capital is 10%.
Required:
Calculate the payback period and the accounting rate of return for the new production equipment.