a) Calculate Annual Rate of Return

b) Calculate the net present value assuming a 17% rate of return

c)Should the company purchase the new equipment?

Magenta Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment: Cost $30,640 Cost $39,000 Accumulated depreciation $40,600 Estimated useful life 8 years Remaining life 8 years Salvage value in 8 years $4,600 Current salvage value $10,400 Annual cash operating costs $29,900 Salvage value in 3 years $0 Annual cash operating costs $35,100 Depreciation is $10,080 per year for the old equipment. The straightline depreciation method would be used for the new equipment over an eightyear period with salvage value of $4,600