Assume that Arctic Cat invests $2.42 million in capital expenditures, including $1.08 million related to manufacturing capacity.

Question:

Assume that Arctic Cat invests $2.42 million in capital expenditures, including $1.08 million related to manufacturing capacity. Assume that these projects have a seven-year life and that management requires a 15% on those projects.
Required
1. What is the amount of annual cash flows that Arctic Cat must earn from those expenditures to achieve a 15% Identify the 7-period, 15% factor from the present value of an table and then divide $1.08 million by the factor to get the annual cash flows required.
2. BTN 24-1 must be completed to answer part 2. How does your answer to part 1 compare to Polaris's required cash flows determined in BTN 24-1? What does this imply about each company's cash flow requirements for these types of projects?
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