Question
The One Ring Company, a leading producer of fine cast silverjewelry, is considering the purchase of new casting equipment that will allow it to expand
The One Ring Company, a leading producer of fine cast silverjewelry, is considering the purchase of new casting equipment that will allow it to expand its product line. Theup-front cost of the equipment is $ 756 000
$756,000. The company expects that the equipment will produce steady income throughout its 11
11-year life.
a. If One Ring requires a 11 %
11% return on itsinvestment, what minimum yearly cash inflow will be necessary for the company to go forward with thisproject?
b. How would the minimum yearly cash inflow change if the company required a 16 %
16% return on itsinvestment
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