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16-17 Quentin Giordano owns a small retail ice...

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16-17 Quentin Giordano owns a small retail ice cream parlor. He is considering expanding the business and has identifies two attractive alternatives. One involves purchasing a machine that would enable him to serve frozen yogurt to customers. The machine would cost $4,050 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $2,970 and $450, respectively. Alternatively, he could purchase for $5,040 the equipment necessary to serve cappuccinos. That equipment has an expected useful life of four years and no salvage value. Additional annual cash revenue and cash operating expenses associated with selling cappuccinos are expected to be $4,140 and $1,215, respectively. Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20 percent. A. Determine the payback period and unadjusted rate of return (use average investment.) for each alternative. B. Indicate which investment alternative you would recommend. Explain your choice.,I was wondering if you were going to do this problem still? I will resubmitt this with the hope that someone will help me out if you cannot, but I need an answer, VERY soon. You said you would do it, but obviously you haven't so I don't see any other alternative. Please let me know ASAP. I believe I already communicated that this assignment is due today. I really hope I can turn it in on time. Thank you, Jennifer,THANK YOU VERY MUCH!!

 

Paper#7794 | Written in 18-Jul-2015

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