Kolkata Municipal Corporation (KMC) is considering the purchase of refuse collection vehicles (RCV). Each such vehicle will
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Kolkata Municipal Corporation (KMC) is considering the purchase of refuse collection vehicles (RCV). Each such vehicle will cost ₹700,000. It should save ₹140,000 in cash operating costs per year. Its estimated useful life is 10 years with zero disposable value. Ignore taxes.
1. What is the payback time?
2. Compute the NPV if the required rate of return is 10%. Should the department buy the vehicles?
3. Using the ARR model, compute the rate of return on the initial investment.
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ANSWER Payback time Payback time refers to the time required for a project to generate cash flows eq...View the full answer
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