Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,400,000 $1,100,000 21,400,000 1,100,000 3 1,400,000 1,100,000 4 1,400,000 1,100,000 5 1,400,000 1,100,000 Required: Compute the NC equipment's ARR. Enter as a percent and round your answer to one decimal place. Accounting rate of return = fill in the blank 1 of 1 %
Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Woodard Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow: Year Cash Revenues Cash Expenses 1 $1,400,000 $1,100,000 21,400,000 1,100,000 3 1,400,000 1,100,000 4 1,400,000 1,100,000 5 1,400,000 1,100,000 Required: Compute the NC equipment's ARR. Enter as a percent and round your answer to one decimal place. Accounting rate of return = fill in the blank 1 of 1 %
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
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![Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return
Woodard Company wants to buy a numerically controlled (NC) machine to be used in
producing specially machined parts for manufacturers of trenching machines. The outlay
required is $800,000. The NC equipment will last five years with no expected salvage value.
The expected after-tax cash flows associated with the project follow:
Year Cash Revenues Cash Expenses
1 $1,400,000 $1,100,000
21,400,000 1,100,000
3 1,400,000 1,100,000
4 1,400,000 1,100,000
5 1,400,000 1,100,000
Required:
Compute the NC equipment's ARR. Enter as a percent and round your answer to one decimal
place.
Accounting rate of return = fill in the blank 1 of 1 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2b07bd35-b116-4f6e-8711-92aa005c41f0%2F67514202-d03a-4778-b42a-5b29e4d19f60%2Fszhlgy_processed.png&w=3840&q=75)
Transcribed Image Text:Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return
Woodard Company wants to buy a numerically controlled (NC) machine to be used in
producing specially machined parts for manufacturers of trenching machines. The outlay
required is $800,000. The NC equipment will last five years with no expected salvage value.
The expected after-tax cash flows associated with the project follow:
Year Cash Revenues Cash Expenses
1 $1,400,000 $1,100,000
21,400,000 1,100,000
3 1,400,000 1,100,000
4 1,400,000 1,100,000
5 1,400,000 1,100,000
Required:
Compute the NC equipment's ARR. Enter as a percent and round your answer to one decimal
place.
Accounting rate of return = fill in the blank 1 of 1 %
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