Question
2. Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight-line depreciation. fill in the blank 2 % 3. Compute the
2. Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight-line depreciation. fill in the blank 2 %
3. Compute the investment's NPV, assuming a required rate of return of 10%. Round present value calculations and your final answer to the nearest dollar.
Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $384,000. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow:
| Year | Cash Revenues | Cash Expenses | ||
| 1 | $510,000 | $360,000 | ||
| 2 | 510,000 | 360,000 | ||
| 3 | 510,000 | 360,000 | ||
| 4 | 510,000 | 360,000 | ||
| 5 | 510,000 | 360,000 |
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