Question
The corporation made available the following data as requested by management in planning to purchase automated plant equipment. A.Economic life of 8 years B.Disposal value
The corporation made available the following data as requested by management in planning to purchase automated plant equipment.
A.Economic life of 8 years
B.Disposal value after 8 years is zero
C.Estimated annual cash inflows for each of the 8 years 81,000
D.Time adjusted internal rate of return 14%
E.Cost of capital 16%
F.The table of present values of 1 received annually for 8 years; at 14% - 4.639 at 165 - 4.344
G.Depreciation is approximately 46,970 annually
Find the required increase in annual cash inflows in order to have the time adjusted rate of return approximately equal the cost of capital?
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