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Bob Jensen Incorporated purchased a $ 6 5 0 , 0 0 0 machine to manufacture specialty taps for electrical equipment. Jensen expects to sell
Bob Jensen Incorporated purchased a $ machine to manufacture specialty taps for electrical equipment. Jensen expects to sell all it can manufacture in the next years. The machine is expected to have a year useful life with no salvage value. Jensen uses straightline depreciation. The net cash inflow is expected to be $ each year for years. Jensen uses a discount rate in evaluating capital investments. Assume, for simplicity, that MACRS depreciation rules do not apply.
Required:
Using Excel including builtin functions for NPV IRR, and MIRR compute the following for the abovereferenced investment:
The payback period, under the assumption that cash inflows occur evenly throughout the year. Do not round intermediate calculations. Round your final answer to decimal place.
The accounting book rate of return based on a initial investment, and b average investment. Round your final answers to decimal place ie
The net present value NPV of the proposed investment under the assumption that cash inflows occur at yearend. Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.
The present value payback period, in years, of the proposed investment under the assumption that cash inflows occur evenly throughout the year. Note: because of this assumption, the present value calculations will be approximate, not exact. To calculate present value amounts, use the appropriate factors from Appendix C Table Do not round intermediate calculations. Round your final answer to decimal place.
The internal rate of return IRRDo not round intermediate calculations. Round your final answer to decimal place ie
The modified internal rate of return MIRRDo not round intermediate calculations. Round your final answer to decimal place ieIn conjunction with this requirement, you might want to consult either of the following two references: MIRR Function andor IRR in Excel.
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