Question
Grouper's Lawn Service needs to purchase a new lawnmower costing $ 8,696 to replace an old lawnmower that cannot be repaired. The new lawnmower is
Grouper's Lawn Service needs to purchase a new lawnmower costing $ 8,696 to replace an old lawnmower that cannot be repaired. The new lawnmower is expected to have a useful life of 4 years, with no salvage value at the end of that period.
(a.) If Grouper's required rate of return is 12%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method?
(b.) If Grouper's required rate of return is 13%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method?
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