Question
TenPoint Crossbow Technologies is considering an investment in automated equipment with a ten-year useful life to improve manufacturing capability of their best-selling crossbow. Managers at
TenPoint Crossbow Technologies is considering an investment in automated equipment with a ten-year useful life to improve\ manufacturing capability of their best-selling crossbow. Managers at Tenpoint have estimated the cash flows associated with the\ tangible costs and benefits of automation, but have been unable to estimate the cash flows associated with intangible benefits.\ Using the company's
12%
required rate of return, the net present value of the cash flows associated with just the tangible costs and\ benefits is a negative
$282,500
. How large would the annual net cash inflows from the intangible benefits have to be to make this a\ financially acceptable investment? (ignore income taxes.)
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