Internal Rate of ReturnPayback, Accounting Rate of Return, Net Present Value, Internal Rate of ReturnNet Present Value and Competing Projects

Follow the format shown in Exhibit $12$B$.1$ and Exhibit $12$B$\mathrm{.}2$ as you complete the requirements below.

Both projects require an initial investment of $$560,000.$ In both cases, assume that the equipment has a life of $5$ years with no salvage value.

Required:

Round present value calculations and your final answers to the nearest dollar.

Assuming a discount rate of $12\%,$ compute the net present value of each piece of equipment.

Puro equipment: :

Briggs equipment: $

a $12\%$ discount rate.

s

per year

Follow the format shown in Exhibit $12$B$.1$ and Exhibit $12$B$\mathrm{.}2$ as you complete the requirements below.

flows associated with the project follow:

Required:

Compute the payback period for the NC equipment. Round your answer to two decimal places.

years

Compute the NC equipment's ARR. Round the percentage to one decimal place. Assume straight$-$line depreciation.

Compute the investment's NPV$,$ assuming a required rate of return of $10\%.$ Round present value calculations and your final answer to the nearest dollar.

$

Compute the investment's IRR.

Follow the format shown in Exhibit $12$B$.1$ and Exhibit $12$ B$.2$ as you complete the requirements below.

Each of the following scenarios is independent. Assume that all cash flows are after$-$tax cash flows.

b$.$ Kathy Shorts is evaluating an investment in an information system that will save $$240,000$ per year. She estimates that the system will last $10$ years. The system will cost $$1,248,000.$ Her company's cost of capital is $10\%.$

Required:

Calculate the IRR for Cuenca Company. The company's cost of capital is $16\%.$ Round your answer to the nearest percent.

$\%$

Should the new equipment be purchased?

N $,$

Calculate Kathy Short's IRR. Round your answer to the nearest percent.

$\%$

Should she acquire the new system?

$($ :

What should be Elmo Enterprises' expected annual cash flow from the plant? Round your answer to the nearest dollar.