12 Homework Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Cobre Company is considering the purchase of new equipment that will speed up the process for extracting copper. The equipment will cost $4,200,000 and have a cash flows associated with the project are as follows: Year Cash Revenues Cash Expenses $6,000,000 $4,800,000 6,000,000 4,800,000 6,000,000 4,800,000 6,000,000 4,800,000 6,000,000 4,800,000 b. Emily Hansen is considering investing in one of the following two projects. Either project will require an investment of $75,000. The expected cash revenues minus depreciable. Project A Project B Year $22,500 $22,500 30,000 30,000 45,000 45,000 75,000 22,500 75,000 22,500 c. Suppose that a project has an ARR of 30% (based on initial investment) and that the average net income of the project is $120,000. d. Suppose that a project has an ARR of 50% and that the investment is $250,000. 75,000 22,500 c. Suppose that a project has an ARR of 30% (based on initial investment) and that the average net income of the project is $120,000. d. Suppose that a project has an ARR of 50% and that the investment is $250,000 Required: 1. Compute the ARR on the new equipment that Cobre Company is considering. Round your answer to one decimal place 3,600,00 % 2. Conceptual Connection which project should Emily Hansen choose based on the ARR Notice that the payback period is the same for both investments (thus preferred). Unlike the payback period, expreferred over the other. ARR Project A 17.44 X Project B Based on the ARR, Emily Hansen chosen Project wn Our O 3. How much did the company in Scenario invest in the project? 4. What is the average net income earned by the project in scenano o