Fargo Corp. is considering the purchase of a new plece of equipment The equipment costs $51,400 and will have a salvage value of $6,400 after nine years. Using the new piece of equipment will increase Fargo's annual cash flows by $7,400. Fargo has a hurdle rate of 13%. a. How much is Fargo's annual depreciation on the equipment? redason b. What is Fargo's projected annual increase in net income? Net Income c. What is the accounting rate of return for purchasing the new plece of equipment? (Round your answer to 2 decimal plac.
Fargo Corp. is considering the purchase of a new plece of equipment The equipment costs $51,400 and will have a salvage value of $6,400 after nine years. Using the new piece of equipment will increase Fargo's annual cash flows by $7,400. Fargo has a hurdle rate of 13%. a. How much is Fargo's annual depreciation on the equipment? redason b. What is Fargo's projected annual increase in net income? Net Income c. What is the accounting rate of return for purchasing the new plece of equipment? (Round your answer to 2 decimal plac.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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