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The hotel just invested new complete culinary equipment for its restaurant that costs $800,000. The equipment is expected to generate annual cash inflows of $250,000.
- The hotel just invested new complete culinary equipment for its restaurant that costs $800,000. The equipment is expected to generate annual cash inflows of $250,000. The equipment is expected to have a useful life of five years with no salvage value while the cost of capital is 14 percent.
- Please calculate:
- Payback for Glady's
- If depreciation is $190,000 per year, Glady's accounting rate of return/ARR
- Excluding the effect of income taxes, Glady's NPV
- Which one is better between NPV and IRR to evaluate Capital Investment?
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1 Payback Period The payback period is calculated by dividing the initial investment by the annual cash inflows In this case the initial investment is ...
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
