Question
Port Renovations, Incorporated (PRI) is considering purchasing a dredging machine. The purchase would require an initial full payment of $1,500,000. The machine is expected to
Port Renovations, Incorporated (PRI) is considering purchasing a dredging machine. The purchase would require an initial full payment of $1,500,000. The machine is expected to generate $100,000 per month for 18 months, at which time it is expected to be sold as scrap for $400,000. Straight-line depreciation will be used over the machines entire useful life. PRIs cost of capital is 1% per month. The applicable tax rate is 30%.
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- 1-What is the NPV of the proposed purchase?
- 2-What is the IRR?
- 3-What is the payback period?
- 4-What is the Accounting Rate of Return?
- No excel sheet
- writing steps
MAKE IT CLEAR PLEASE
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
5th edition
78025915, 978-1259115400, 1259115402, 978-0078025914
