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Calculate the NPV, ARR, Payback period, and IRR. 11-46 NPV, ARR, and Payback Snuffy's Drive-In is considering a proposal to invest in a speaker system
Calculate the NPV, ARR, Payback period, and IRR.
11-46 NPV, ARR, and Payback Snuffy's Drive-In is considering a proposal to invest in a speaker system that would allow its employees to service drive-through customers. The cost of the system (including installation of special windows and driveway modifications) is $28,000. Brad Board, manager of Snuffy's, expects the drive-through operations to increase annual sales by $14,000, with a 25% contribution margin ratio. Assume that the system has an economic life of 10 years, at which time it will have no disposal value. The required rate of return is 10%. Ignore taxes Step by Step Solution
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