Briar Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flow of $204,000. The equipment will have an initial cost of $1,204,000 and an 8-year useful life. The salvage value of the equipment is estimated to be $204,000. Briar's cost of capital is 8%. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) Note: Use appropriate factor from the PV tables. Required: a. What is the accounting rate of return? b. What is the payback period? c. What is the net present value? d. What would the net present value be with a 14% cost of capital? e. Based on the NPV calculations, what would be the equipment's internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E What is the accounting rate of return? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Rate of Retur % Required A Required B>
Briar Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flow of $204,000. The equipment will have an initial cost of $1,204,000 and an 8-year useful life. The salvage value of the equipment is estimated to be $204,000. Briar's cost of capital is 8%. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) Note: Use appropriate factor from the PV tables. Required: a. What is the accounting rate of return? b. What is the payback period? c. What is the net present value? d. What would the net present value be with a 14% cost of capital? e. Based on the NPV calculations, what would be the equipment's internal rate of return? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E What is the accounting rate of return? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Rate of Retur % Required A Required B>
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Briar Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an
annual increase in net cash flow of $204,000. The equipment will have an initial cost of $1,204,000 and an 8-year useful life. The
salvage value of the equipment is estimated to be $204,000. Briar's cost of capital is 8%. (Future Value of $1. Present Value of $1,
Future Value Annuity of $1. Present Value Annuity of $1)
Note: Use appropriate factor from the PV tables.
Required:
a. What is the accounting rate of return?
b. What is the payback period?
c. What is the net present value?
d. What would the net present value be with a 14% cost of capital?
e. Based on the NPV calculations, what would be the equipment's internal rate of return?
Complete this question by entering your answers in the tabs below.
Required A Required B Required C Required D
What is the accounting rate of return?
Required E
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
Rate of Return
Required A
Required B >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52f9fb82-6dad-47e6-a82b-05eaf4004ef5%2Fc9a0de51-5863-46dc-aff2-edcf5cbc43d6%2Fu51cf7o_processed.png&w=3840&q=75)
Transcribed Image Text:Briar Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an
annual increase in net cash flow of $204,000. The equipment will have an initial cost of $1,204,000 and an 8-year useful life. The
salvage value of the equipment is estimated to be $204,000. Briar's cost of capital is 8%. (Future Value of $1. Present Value of $1,
Future Value Annuity of $1. Present Value Annuity of $1)
Note: Use appropriate factor from the PV tables.
Required:
a. What is the accounting rate of return?
b. What is the payback period?
c. What is the net present value?
d. What would the net present value be with a 14% cost of capital?
e. Based on the NPV calculations, what would be the equipment's internal rate of return?
Complete this question by entering your answers in the tabs below.
Required A Required B Required C Required D
What is the accounting rate of return?
Required E
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
Rate of Return
Required A
Required B >
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