Question
Bryant Company has obtained the following data about a possible planned investment: Cost $270,000 Terminal salvage value in 8 years $10,000 Additional annual revenues for
Bryant Company has obtained the following data about a possible planned investment: Cost $270,000 Terminal salvage value in 8 years $10,000 Additional annual revenues for 8 years $250,000 Additional annual cash expenses for 8 years $200,000 Estimated useful life in years 8 Minimum desired rate of return 10% Present value of ordinary annuity, 10%, 8 periods 5.3349 Present value of one, 10%, 8 periods 0.4665 The company uses straight-line depreciation method. Ignore income taxes. Required: A) Compute the net present value of the investment. B) Compute the payback period.
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