Question
5.3 years, E26-19 Using payback to make capital investment decisions. Rapp Hardware is adding a new product line that will require an investment of $1,418,000.
5.3 years, E26-19 Using payback to make capital investment decisions. Rapp Hardware is adding a new product line that will require an investment of $1,418,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $310,000 the first year, $290,000 the second year, and $250,000 each year thereafter for eight years. Compute the payback period. Round to one decimal place.
Note: Exercise S26-19 must be completed before attempting Exercise S26-20.E26-20 Using ARR to make capital investment decisions.
16.67%
Refer to the Rapp Hardware information in Exercise E26-19. Assume the project has no residual value. Compute the ARR for the investment. Round to two places.
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