Montego Production Company is considering an investment in new machinery for its factory. Various information about the proposed investment follows: Initial investment $ 860,000 Useful life 6 yearsSalvage value $ 20,000 Annual net income generated $ 66,000 Montego’s cost of capital 11% Assume straight line depreciation method is used. 4. Recalculate Montego's NPV assuming its cost of capital is 12 percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. annually:4.1114, other: 0.5066 Help Montego evaluate this project by calculating each of the following: Required:2. Payback period.
Montego Production Company is considering an investment in new machinery for its factory. Various information about the proposed investment follows:
Initial investment $ 860,000
Useful life 6 years
Salvage value $ 20,000
Annual net income generated $ 66,000
Montego’s cost of capital 11%
Assume
Note: Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. annually:4.1114, other: 0.5066
Help Montego evaluate this project by calculating each of the following:
Required:
2. Payback period.
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