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Supposed your company is evaluating a project that would have a ten-year life and would require a $1,806,000 investment in equipment. At the end of
Supposed your company is evaluating a project that would have a ten-year life and would require a $1,806,000 investment in equipment. At the end of ten years, the project would be over and the equipment would have no salvage value. The project would provide net operating income each year as follows (Ignore income taxes): Sales $2,000,000 Variable expenses 1,350,000 Contribution margin 650,000 Fixed expenses: Fixed out-of-pocket cash expenses $230,000 Depreciation 180,600 410,600 Net operating income 5 2391400 I Click here to view Exhibit 1281 and Exhibit 1232, to determine the appropriate discount factor(s) using the tables provided. All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 14%. All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 14%. Required: a. Compute the project's net present value. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) b. Compute the project's internal rate of return. (Round your final answer to the nearest whole percent.) c. Compute the project's payback period. (Round your answer to 2 decimal places.) d. Compute the project's simple rate of return. (Round your final answer to the nearest whole percent.)
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