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1. An initial investment cost is $200,000 and each annual net cash flow is $40,000 for the next 7 years. The expected rate of return
1. An initial investment cost is $200,000 and each annual net cash flow is $40,000 for the next 7 years. The expected rate of return for such a purchase is 6%. What is the internal rate of return for this investment? 2. Turner Printing is looking to invest in a printer, which costs $100,000. Turner expects a 20% rate of return on this printer investment. The company expects incremental revenues of $50,000 and incremental expenses of $10,000. There is no salvage value for the printer. What is the accounting rate of return (ARR) for this printer? 3. Rudolph Incorporated is considering the X-ray machine that had present value cash flows of $350,000 and an initial investment cost of $300,000. Another X-ray equipment option, Option B, produces present value cash flows of $400,000 and an initial investment cost of $200,000. What is the profitability index of Option B? 4. Rudolph Incorporated is determining the NPV for a new X-ray machine. Initial investment to buy the machine: $200,000 Expected annual cash flows (cost savings, efficiencies): $70,000 Expected life of machine: 6 years Required rate of return on such an investment: 10% What is the NPV
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