Robertson Hardware is adding a new product line that will require an investment of $1,454,000. Managers estimate that this investment will have a 10-year ife and generate net cash inflows of $310,000 the first year, $290,000 the second year, and $250,000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places.
Robertson Hardware is adding a new product line that will require an investment of $1,454,000. Managers estimate that this investment will have a 10-year ife and generate net cash inflows of $310,000 the first year, $290,000 the second year, and $250,000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places.
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
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Robertson Hardware is adding a new product line that will require an investment of $1,454,000. Managers estimate that this investment will have a 10-year
fe and generate net cash inflows of $310,000 the first year, $290,000 the second year, and $250,000 each year thereafter for eight years. Assume the
project has no residual value. Compute the ARR for the investment. Round to two places.
Select the formula, then enter the amounts to calculate the ARR (accounting rate of return) for the new product line. (Round ARR to the nearest hundredth
percent (two decimal places). X.XX%.)
Average annual operating income
+ JAverage amount invested
ARR
310000
1.07 %
290000
E26-21 (simi.
HW Score: 10.71%, 3.43 of 32 points
O Points: 0 of 4
Save
Amount invested
vill require an investment of $1,454,000. Managers estimate that this investment will have a 10-year
rear, $290,000 the second year, and $250,000 each year thereafter for eight years. Assume the
investment. Round to two places.
Average amount invested
Average annual operating income
the ARR (accounting rate of return) for the new product line. (Round ARR to the nearest hundredth
Present value of net cash inflows
Average annual operating income
Average amount invested
ARR
310000
290000
1.07 %
= Homework: .. «
Question
71%, 3.43 of 32 points
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Amount invested
Robertson Hardware is adding a new product line
fe and generate net cash inflows of $310,000 the Average amount invested
project has no residual value. Compute the ARR fc
pers estimate that this investment will have a 10-year
each year thereafter for eight years. Assume the
Average annual operating income
Select the formula, then enter the amounts to calci Present value of net cash inflows
percent (two decimal places). X.XX%.)
product line. (Round ARR to the nearest hundredth
Average annual operating income
• |Average amount invested
ARR
Toxt Brodictionc: On
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