Grove Corporation is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $$200,500.$ The equipment will have an initial cost of $$1,200,500$ and an $8-$year useful life. The salvage value of the equipment is estimated to be $$200,500.$ Grove's cost of capital is $10\%.($Future Value of $$1,$ Present Value of $$1,$ Future Value Annuity of $$1,$ Present Value Annuity of $$1)$

Note: Use appropriate factor from the PV tables.

Required:

a$.$ What is the accounting rate of return?

b$.$ What is the payback period?

c$.$ What is the net present value?

d$.$ What would the net present value be with a $14\%$ cost of capital?

e$.$ Based on the NPV calculations, what would be the equipment's internal rate of return?

Complete this question by entering your answers in the tabs below.

Required A

What is the net present value?

Note: Do not round intermediate calculations and round your final answer to the nearest dollar amount.

Net Present Value