Solve with complete solution and draw the cash flow diagram A company is considering constructing a plant to manufacture a proposed new product. The land costs $300,000, the building cost $600,000, the equipment costs $250,000, and $100,000 additional working capital is required. It is expected that the product will result in sales of $750,000 per year for 10 years ,at which the land can be sold for $400,000, the building for $350,000, and the equipment for $50,000 and all of the working capital would be recovered at EOY10. The annual expense for labor, materials, and all other items are estimated to total $500,000 and will decrease by 20,000 per year until year 10. If the company requires a MARR of 12% per year on projects of comparable risk, determine if it should invest in the new product line. a) Use IRR and AW method. IRR = ____% and AW = $_____ b) The simple payback is ____ years and discounted payback period is _____ years.    Note: For equivalent worth, round off the final answer to whole number. For Rate of Return, round off to two decimal places (in percentage)

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Solve with complete solution and draw the cash flow diagram

A company is considering constructing a plant to manufacture a proposed new product. The land costs $300,000, the building cost $600,000, the equipment costs $250,000, and $100,000 additional working capital is required. It is expected that the product will result in sales of $750,000 per year for 10 years ,at which the land can be sold for $400,000, the building for $350,000, and the equipment for $50,000 and all of the working capital would be recovered at EOY10. The annual expense for labor, materials, and all other items are estimated to total $500,000 and will decrease by 20,000 per year until year 10. If the company requires a MARR of 12% per year on projects of comparable risk, determine if it should invest in the new product line.

a) Use IRR and AW method. IRR = ____% and AW = $_____

b) The simple payback is ____ years and discounted payback period is _____ years. 

 

Note: For equivalent worth, round off the final answer to whole number. For Rate of Return, round off to two decimal places (in percentage)

 
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