Bowtie inc is considering a project that would have an eleven-year life and would require purchasing new equipment for 1,767,800. The company will sell its old equipment for 250,000.

At the end of elven years, the project would terminate and the new equipment would have no salvage value. The companys requires rate of return is 13%. The project would provide net operating income each year as follows:

Annual cash flows:

Annual sales revenue 690,000

Annual cost savings 230,000

Annual cash operating costs 630,000

Annual deprecation expenses 45,000

Required: compute the following:

Initial investment if the project=

Net cash inflow=

The projects internal rate of return

Internal rate return=

The projects payback period

Payback period=

The projects simple rate of return

Simple rate of return=

Based on the information above, would the company accept the project?