Roberts Company is considering an investment in equipment that is capable of producing moreefficiently than the current technology. The outlay required is $2,293,200. The equipment isexpected to last five years and will have no salvage value. The expected cash flows associatedwith the project are as follows: Year Cash Revenues Cash Expenses 1 $2,981,160 $2,293,200 2 2,981,160 2,293,200 3 2,981,160 2,293,200 4 2,981,160 2,293,200 5 2,981,160 2,293,200 Required:1. Compute the project’s payback period.2. Compute the project’s accounting rate of return.3. Compute the project’s net present value, assuming a required rate of return of 10 percent.4. Compute the project’s internal rate of return.
Roberts Company is considering an investment in equipment that is capable of producing more
efficiently than the current technology. The outlay required is $2,293,200. The equipment is
expected to last five years and will have no salvage value. The expected
with the project are as follows:
Year Cash Revenues Cash Expenses
1 $2,981,160 $2,293,200
2 2,981,160 2,293,200
3 2,981,160 2,293,200
4 2,981,160 2,293,200
5 2,981,160 2,293,200
Required:
1. Compute the project’s payback period.
2. Compute the project’s accounting
3. Compute the project’s
4. Compute the project’s
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