Roberts Company is considering an investment in equipment that is capable of producing electronic parts twice as fast as existing technology. The outlay required is

\($2,340,000\). The equipment is expected to last five years and will have no salvage value.

The expected cash flows associated with the project are as follows:

Required:
1. Compute the project’s payback period.
2. Compute the project’s accounting rate of return on:

a. Initial investment

b. Average investment 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.

Transcribed Image Text:

Year Cash Revenues Cash Expenses 12345 $3,042,000 $2,340,000 3,042,000 2,340,000 3,042,000 2,340,000 3,042,000 2,340,000 3,042,000 2,340,000