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Indigo Company is considering a capital investment of $427,100 in additional equipment. The new equipment is expected to have a useful life of 8 years
Indigo Company is considering a capital investment of $427,100 in additional equipment. The new equipment is expected to have a useful life of 8 years with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash flows are expected to be $43,000 and $83,000, respectively. Indigo requires a 10% return on all new investments. Compute each of the following: (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round cash payback periad, profitability index and annual rate of return to 2 decimal places, es. 15.25 and other answers to 0 decimal places, es 5,275. 1. Cash payback period. years 2. Net present value. 3. Profitability index. 4. Internal rate of return. % 5. Annual rate of return. %
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