Moonlight Company is thinking about acquiring a new equipment for Rp80,000. The new facility will generate...

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Moonlight Company is thinking about acquiring a new equipment for Rp80,000. The new facility will generate net cash inflows of Rp20,000 annually for six years. At the end of year six the equipment will have no residual value. The company uses the straight-line depreciation method, and its owners require an annual return of 12% on such investments. Compute the following: a) the payback period, b) the accounting rate of return, c) the net present value, d) the internal rate of return, and e) the profitability index of this investment. (10 points) Moonlight Company is thinking about acquiring a new equipment for Rp80,000. The new facility will generate net cash inflows of Rp20,000 annually for six years. At the end of year six the equipment will have no residual value. The company uses the straight-line depreciation method, and its owners require an annual return of 12% on such investments. Compute the following: a) the payback period, b) the accounting rate of return, c) the net present value, d) the internal rate of return, and e) the profitability index of this investment. (10 points)

Answer rating: 100% (QA)

To calculate the various financial metrics for the investment in the new equipment well consider the given information and apply the appropriate formulas a The Payback Period The payback period is the ... View the full answer